When your mortgage servicer changes, you’ll receive a letter notifying you of the change at least 15 days before the date of the transfer. And in that case, you might continue making mortgage payments to your servicer without ever having to worry about who that company is or the quality of its customer service. The mortgage lender is the company you applied to for your loan and the one that lent you the money. Your servicer will also work with you if you can’t keep up with your mortgage payments. Although it would be the entity to initiate foreclosure proceedings, it would also help you try to prevent that possibility. Loan servicing was traditionally seen as a core function held within banks.

  • While lenders primarily focus on initiating new mortgage loans, servicers primarily focus on administering existing loans.
  • Anyway, without getting too convoluted here, it’s important to note this distinction between lender and servicer so you know who you’re dealing with.
  • If you’re concerned about servicing, inquire as to whether a lender services their own loans.
  • There are several actions that could trigger this block including submitting a certain word or phrase, a SQL command or malformed data.
  • It distributes shares of your payments to all the relevant parties, including your homeowners insurance company and tax collectors, and it issues your statement every billing cycle.

The service protects your rights under the Taxpayer Bill of Rights, helps you resolve problems with the IRS and recommends changes that will prevent the problems. Take note of when they’ll begin accepting payments, and when the old company will stop accepting payments. One thing mortgage companies figured out in recent years was that keeping in touch with their past customers was a great way to generate repeat business.

Why did my lender choose Shellpoint to service my mortgage?

Many financial institutions act as both mortgage servicers and mortgage lenders. However, it’s also common for a homeowner to secure a mortgage from a lender, then have it transferred to a different servicer. After you get a mortgage loan with a lender, that loan is often transferred or sold to a mortgage servicer. The servicer’s job is to handle the administrative tasks of your loan, including receiving and allocating payments and following up on late payments. If the lender is set up to handle deposits, such as a bank or financing company, the company can also service the loan. A mortgage servicing company can come into play when a lender cannot hold deposits.

In lieu of statements, the mortgage servicer may give the borrower a coupon book if the loan has a fixed interest rate. Transferring the loan to a mortgage servicer does not change the terms of your mortgage — you’re simply sending your payment to a different recipient, and you might get a new account number. Some lenders do their own mortgage servicing, but many aren’t large enough to deal with loan servicing profitably. These lenders often hand that task off to a mortgage servicing company. If the escrow account analysis shows a deficiency, the servicer may require the borrower to pay additional monthly deposits to the account to eliminate the deficiency. How much the servicer may require depends on the amount of the deficiency.

  • The Public Guidance Documents that reference escrows disclosures are referred to as Escrow Disclosure Public Guidance Documents.
  • Also, visiting the MERS® Servicer Identification System website might be able to help identify the provider.
  • Perhaps one of the most confusing aspects of getting a mortgage is knowing who you actually pay once the thing funds.

Loan servicing may also refer to the borrower’s obligation to make timely payments of principal and interest on a loan as a way to maintain creditworthiness with lenders and credit-rating agencies. Also, Regulation X does not govern whether borrowers can voluntarily make payments to the servicer for the purpose of satisfying an escrow account shortage. Hence, the acceptance of a voluntary, unsolicited payment made by the borrower to the servicer to satisfy an escrow account shortage is not a violation of Regulation X. That said, if your loan servicer changes, it’s still a good idea to double-check some things. Make sure your principal balance is listed correctly, your most recent payment was properly applied, and the escrow account balance is accurate.

Should I care who my mortgage servicing company is?

For general information about the exemption and modifications to the periodic statement or coupon book when a borrower is in bankruptcy, see section 5.10 of the Mortgage Servicing Small Entity Compliance Guide . So if you want to increase the odds of having a positive experience with a mortgage servicing company, start by getting rate quotes from well-known, highly-rated lenders. It’s important to note that your mortgage servicing company can change multiple times over the life of your loan. Knowing your mortgage servicing company is important in the event that you have to interact with the company outside of making your payments. Here’s what you need to know about mortgage servicers, including what to do if you’re unhappy with your company. You usually don’t have to interact with them aside from sending monthly payments.

Paying Off Your Mortgage

As a result, these tasks are typically outsourced to a third-party mortgage servicer. But when shopping for a mortgage loan, the focus shouldn’t be on the servicing company. Instead, they transfer the servicing https://personal-accounting.org/what-does-a-mortgage-servicer-do-and-what-happens/ rights to another company that handles the ongoing administration of the loan. Our mission is to help low-income families who cannot afford lawyers file bankruptcy for free, using an online web app.

How to find your mortgage servicer

Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range, can also impact how and where products appear on this site. While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service. There are two main reasons why your lender might sell your loan to a mortgage servicer.

Why Two Companies?

For example, if the monthly mortgage payments are $2,000 and the servicing fee is 0.25%, the servicer is entitled to retain $5—or (0.0025 x 2,000)—of each payment before passing the remaining amount to the note holder. During this time, the new loan servicer can’t charge you a late fee or mark the payment as late if your payment was sent to your old servicer by its due date or within the grace period. Unfortunately, mortgage servicing rights are frequently transferred shortly after your loan funds, which can make it confusing to know who to pay. The list above should give you a better idea of what loan servicers do, and why banks and lenders may choose to outsource these things. They also manage your escrow account if your home loan has impounds, collecting a portion of property taxes and homeowners insurance each month, before making those payments on your behalf when due. When your loan servicer changes, you’ll need to change who you make payments to.

Mortgage lenders and mortgage servicers each serve different roles related to your home loan. While lenders primarily focus on initiating new mortgage loans, servicers primarily focus on administering existing loans. This division of labor is more profitable and practical for lenders and, in theory, more efficient for all parties. Past problems with the mortgage servicing industry have come to light over the last 10–20 years. State and federal lawmakers have since taken actions to help ensure that the mortgage servicing process is safe and reliable for borrowers. Though transferring a mortgage from one loan servicer to another has long been commonplace, there haven’t always been good regulations requiring servicers to give their borrowers notice of the transfers.

What Mortgage Servicers Do

This letter will include pertinent information such as the name and address of the new servicer, and the date you’ll begin sending payments to the new company. Your mortgage loan servicer is also the company you’ll turn to if you need mortgage relief — like a forbearance plan or loan modification — due to financial hardship. The mortgage servicing company also tracks a customer’s payment history and reports this information to the credit bureaus. Because your mortgage servicer handles the management of your loan, it’s important that you know who it is.