Servicing a loan: What it means & why it matters

by Bill and Aby Brooks, REALTORS® 01/01/2023

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Mortgage servicers are companies responsible for the logistical aspects of servicing a loan. Things like processing and tracking payments, sending payment reminders and filing foreclosure documents are some of the tasks they perform. 

How loan servicing works

Your mortgage servicer helps handle your loan, but also satisfies certain federal requirements. For example, your servicer sends a report each year describing your accounts balances, property tax payments, homeowners insurance and other pertinent account activity. 

Sometimes, your loan servicer might change financial institutions. When this happens, servicers are required to notify you within 30 days of your mortgage transfer.

Parties involved in the mortgage service industry

The mortgage loan industry involves three key players: mortgage lenders, investors and servicers. 

Mortgage Lender

The lenders, or originators, are banks or mortgage firms that give you the money when a home loan was approved for you.

Mortgage Investor

A mortgage investor is a person or organization - often a government-sponsored entity - that buys the entire mortgage from the originator. This allows the lender to sell additional mortgages.

Loan Servicer

Finally, the servicers are companies handling your loan account. In some cases, the loan owner - whether a lender or investor - can also be a servicer. However, borrowers are usually connected with a third-party company to help manage repayment.

Changing your mortgage servicer

Having a quality loan servicer can make a huge difference in your borrowing experience. An excellent company maintains accurate information, is quick to contact and offers good customer service. Their important duties include canceling mortgage insurance, assisting in avoiding foreclosure or answering general queries. 

Unfortunately, you have no control over who can buy and service your loan. The lender’s right to sell to an external company is included in the terms of service you have to agree to when signing up for the loan. 

These are only a few of the important aspects of mortgage servicing to know. However, the more you understand about the parties involved, the better borrowing experience you’ll have.

Loan Servicing
Mortgage Lender
Mortgage
About the Author
Author

Bill and Aby Brooks, REALTORS®

Aby’s understanding of excellent customer service stems from her extensive professional background. Prior to earning her real estate license in 2005, along with her college degree that focuses on business and engineering, Aby was the head of purchasing, inventory and quality assurance for an OEM medical and aerospace manufacturing company. Known by her clients and fellow realtors for her tenacity, honesty, integrity, and attention to detail, as a full-time realtor, she is also appreciated for her quick response to her client’s needs. Aby has been an avid horse rider and owner since the age of eight, with her husband Billas a local firefighter/EMT they are very active within the community. Bill served as a US Army Airborne Ranger in 75th Ranger Regiment, he is a combat-wounded veteran who was awarded a Purple Heart. Bill's background as facility Manager for an International metals company and as a firefighter/EMT gives him the experience, attention to detail and the desire to go above and beyond to serve his customers. The Brooks' serve on the board of a local non-profit (501c3) that gives back to the veterans, first responders and their families. The Brooks family resides on their small ranch in Manatee County. Aby& Bill excel in all types of real estate and their passion is helping people. “We genuinely like people, growing up in Sarasota and Manatee counties and now raising our own family here, it is an absolute pleasure to share our growing area with newcomers and reminisce with longtime residents. Our area has so much to offer and it is our business to help folks buy and sell their own piece of paradise.”