What's a Mortgage Servicer?

The servicer is the company that actually takes care of your mortgage account.

A “loan servicer” or “mortgage servicer” is the company that handles your loan account. The servicer might be the loan owner or it might be another company. Read on to learn more about servicers and what they do.

Understanding Parties in the Mortgage Servicing Industry

Here are a few of the main parties involved in residential mortgage servicing.

Lender. The lender or “originator" is the bank or mortgage company that lent you the money when you took out your home loan.

Investor. Often, the originator—the original owner of the loan—will sell the loan to a new owner, which is called an “investor.”

Servicer. The servicer is the company that actually manages your loan account. In some cases, the loan owner is also the servicer. Other times, the owner sells the right to service the loan to another company. This sale is called a transfer of servicing rights. The third-party servicer then administers the loan account on behalf of the owner for a fee. In the past, servicers were almost always banks. Now, though, the servicer might be a bank or a non-bank specialty servicing company.

What Loan Servicers Do

Among other activities, the mortgage servicer usually:

(Learn more about how mortgage servicing works.)

Servicers Sometimes Make Mistakes

When handling loan accounts, servicers sometimes make errors by:

  • misapplying a borrower’s payments to the wrong account
  • overcharging fees to a borrower’s account or charging unreasonable fees
  • purchasing expensive homeowners’ insurance (called “force-placed” insurance) for a borrower’s property, even when there’s already an insurance policy in place
  • improperly initiating a foreclosure
  • dual-tracking a foreclosure at the same time that a mortgage workout option, like a modification, is in progress, and
  • failing to pay property taxes or homeowners’ insurance premiums when a borrower has an escrow account.

(Read more about common abuses and errors made by the mortgage servicing industry.)

Getting Help With Loan Servicer Errors

If your loan servicer makes an error or you need information about your loan account, you may call or write a letter to the servicer—though you’ll get more legal protections if you write a letter. Under the federal Real Estate Settlement Procedures Act (RESPA), if you send a written "notice of error" or "request for information," the servicer has to respond to your letter within specific time limits.

If writing to your servicer doesn’t get you anywhere or if you’re facing an imminent foreclosure due to a servicer’s mistake, consider talking to a foreclosure attorney who can advise you what to do in your particular situation.

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