Buying a home is one of the biggest and most expensive purchases you’ll ever make. Before signing away your hard-earned money, it’s important to understand exactly what you’re getting into, including who the mortgage servicer is and how they work. In this article, we’ll break down what mortgage servicing is and how it works to help you make an informed decision when selecting a lender.
What is mortgage servicing?
When you take out a mortgage to buy a home, the lender isn’t going to hold onto that loan for the entire life of the repayment term. Instead, they’ll sell it on the secondary market to investors and then pocket the proceeds. The new owners of your loan are now responsible for collecting your monthly payments, which is where mortgage servicers come in.
Mortgage servicing is simply the process of collecting payments from a borrower and then forwarding that money to the rightful owner of the loan. This includes tasks such as processing escrow accounts, managing tax documents, and handling default cases. Mortgage servicers make their money by charging borrowers a small fee for these services, which is typically rolled into the monthly payment.
While most large banks have their own in-house servicing division, there are also many third-party servicers that handle loans for multiple lenders. Regardless of who services your loan, you’ll always have a single point of contact that you can reach out to with any questions or concerns. And if you ever need to refinance or sell your home, your servicer will be there to help facilitate those transactions as well.
How does a servicer help with a mortgage?
A mortgage servicer is a company that manages the day-to-day operations of a mortgage loan on behalf of the lender. The servicer is responsible for collecting monthly loan payments from borrowers, as well as managing the escrow account, and paying property taxes and insurance on behalf of the borrower.
The servicer also handles customer service inquiries from borrowers and provides assistance with loan modification and loss mitigation programs. In addition, the servicer may handle foreclosure proceedings if the borrower defaults on their loan.
Many services are large, national companies that service thousands of loans. However, some smaller lenders may use in-house servicing staff or contract with a third-party firm to service their loans.
What are the different types of services?
There are two types of services: primary servicers and special servicers.
Primary servicers are responsible for collecting monthly mortgage payments from borrowers and managing the loan’s escrow account. They also handle customer service inquiries and provide information to borrowers about their loan.
Special services are typically used when a borrower falls behind on their mortgage payments or if the loan is in danger of default. Special servicers have more flexibility to work with borrowers who are struggling to make their payments. They may offer solutions such as modifying the terms of the loan, which could include extending the length of the loan or reducing the interest rate.
Who are the most popular mortgage servicing companies?
As of 2019, the most popular mortgage servicing companies in the United States are Quicken Loans, Bank of America, and Wells Fargo. These companies service the majority of mortgages in the country and have a reputation for being reliable and helpful to borrowers.
When you get a mortgage, your lender will likely transfer the servicing of your loan to one of these companies. They will then be responsible for collecting your monthly payments, managing your account, and providing customer service if you have any questions or problems.
These companies all have websites that provide information about their services and contact information in case you need to reach them. They also typically offer online tools that can help you manage your account and make payments. If you are interested to learn more about Noteflow, check out the website.
In conclusion, a mortgage servicer is an important part of the home loan process. They are responsible for collecting payments, managing escrow accounts, and communicating with borrowers. Understanding how they work can help you make informed decisions about your home loan and avoid any potential pitfalls along the way. If you have any questions or concerns about your mortgage servicer, then it would be wise to contact them directly so that they can provide you with all of the necessary information that you need.