What is a mortgage service company?

What is a Mortgage Service Company?

Mortgage service companies are entities that oversee the administrative tasks related to a mortgage after it has been closed. These tasks can include processing monthly mortgage payments, responding to borrowers’ inquiries, sending out mortgage statements, managing escrow accounts, and initiating foreclosure if necessary.

Mortgage service companies typically work with four types of loans and are usually backed by government agencies (Ginnie Mae) and government-sponsored enterprises (Fannie Mae and Freddie Mac). In some cases, the mortgage lender will hold onto the servicing rights on a loan, and the borrower will make payments to them for the life of the loan. In other cases, the servicing rights are sold to a third-party company, which then takes over the responsibility of ensuring the loan is paid back.

Role of Mortgage Service Companies

Mortgage service companies play a crucial role in the mortgage process, providing various services to borrowers and investors. Their primary responsibilities include:

Payment Processing

Mortgage servicers process and credit homeowners’ mortgage payments accurately and on time. They collect the monthly payments from borrowers and distribute the funds to the appropriate parties, such as investors, tax authorities, and insurers.

Escrow Accounts

Mortgage servicers may maintain escrow accounts on behalf of borrowers. These accounts are used to hold funds for payment of property taxes and insurance premiums. The servicer will pay these entities on the borrower’s behalf when the payments are due.

Communication and Customer Service

Mortgage servicers serve as a key point of contact for borrowers. They build relationships with customers and are responsible for resolving any issues or problems that may arise during the life of the loan. They also communicate with borrowers early if payments are missed to help them avoid falling further behind.

Loss Mitigation

If borrowers experience financial difficulties and cannot make their mortgage payments, mortgage servicers work with them to explore options for loan modification, forbearance, short sale, or deed in lieu of foreclosure. They aim to help borrowers stay in their homes whenever possible.

Foreclosure Process

If foreclosure becomes unavoidable, the mortgage servicer initiates the foreclosure process and manages the property until it can be appropriately transferred or sold. They work to protect the interests of the investors and ensure a smooth transition.

Conclusion

Mortgage service companies are essential players in the mortgage industry, providing a range of services that support successful homeownership. Their responsibilities include payment processing, escrow account management, communication with borrowers, loss mitigation, and foreclosure management. By fulfilling these roles, mortgage service companies contribute to the stability and efficiency of the mortgage market.

Sources

• Investopedia: Mortgage Lenders and Mortgage Servicers
• Rocket Mortgage: What Are Mortgage Servicing Companies?
• Urban Institute: What is Mortgage Servicing?

FAQs

What is a mortgage service company?

Mortgage service companies are entities that oversee the administrative tasks related to a mortgage after it has been closed. They handle tasks such as processing payments, managing escrow accounts, communicating with borrowers, and initiating foreclosure if necessary.

What are the main responsibilities of a mortgage service company?

Mortgage service companies are responsible for payment processing, escrow account management, communication with borrowers, loss mitigation, and foreclosure management.

How do I know who my mortgage service company is?

You can find out who your mortgage service company is by checking the top of your mortgage statement or payment coupons. The return address of the company will be the mortgage servicer.

What should I do if I have a problem with my mortgage servicer?

If you have a problem with your mortgage servicer, you should contact them directly. You can also file a complaint with the Consumer Financial Protection Bureau (CFPB) or your state’s attorney general’s office.

What are some tips for working with a mortgage service company?

Here are some tips for working with a mortgage service company:
* Keep your contact information up to date.
* Make your payments on time.
* Contact your servicer immediately if you have any financial difficulties.
* Be aware of your rights and responsibilities as a borrower.

What is the difference between a mortgage lender and a mortgage servicer?

A mortgage lender is the company that provides the loan to the borrower. A mortgage servicer is the company that handles the administrative tasks related to the loan after it has been closed.

Can my mortgage be sold to a different servicer?

Yes, your mortgage can be sold to a different servicer. You will be notified in writing if your mortgage is sold.