A “loan servicer” or “mortgage servicer” is the company that handles your loan account. The servicer might be loan owner or it might be another company. Read on to learn more about servicers and what they do.
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 loan accounts on behalf of the owner for a fee. In the past, mortgage servicers were almost always banks. Now, though, the servicer might be a bank or a non-bank specialty servicing company.
Among other activities, the mortgage servicer usually:
When handling loan accounts, servicers sometimes make errors by:
(Read more about common abuses and errors made by the mortgage servicing industry.)
If your loan servicer makes an error with your account—or you need information about your loan account—you may call or write a letter to your 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.