When you decide to purchase a home, securing a mortgage loan is a crucial step in the process. However, many homebuyers are often unaware of the role mortgage servicing companies play after closing on a home.

Once you’ve closed on your property, the journey doesn’t end. Mortgage servicing companies become your go-to point of contact for everything related to managing your mortgage. But what exactly is their role, and how do they differ from the original lender? Let’s dive into everything you need to know!

What is a Mortgage Servicer?

A mortgage servicer is the company that manages the ongoing administrative tasks associated with your mortgage after closing. These tasks include processing monthly payments, handling escrow accounts, sending out mortgage statements, and managing things like property taxes and insurance payments. In some cases, they may also offer assistance if you’re struggling with your mortgage payments, such as helping you find loss mitigation options.

The servicer may or may not be the same entity that lent you the money to purchase your home. Typically, the rights to service the mortgage are sold to a third-party company, which then becomes responsible for ensuring the loan is paid back. However, in some instances, the original lender may retain the servicing rights.

Can Your Mortgage Servicer Change?

Yes, it’s possible for your mortgage servicer to change during the life of your loan. In fact, roughly one-third of homeowners experience a transfer of their mortgage servicing rights at some point. If your servicer changes, you will be notified and given at least 15 days’ notice before the first payment is due to your new servicer.

Don't worry – if there’s a servicing transfer, the terms of your mortgage won’t change, and you’ll typically have a 60-day grace period where you won’t be charged a late fee if you send your payment to the old servicer by accident.

Who Are the Key Players in Mortgage Servicing?

Here’s a breakdown of the entities involved in your mortgage:

• Servicer: The company responsible for managing your loan after closing.
  
  

• Lender: The financial institution that initially gave you the loan to purchase the home.
  
  

• Investor: The entity that actually owns your loan.
  
  

• Regulator: Government agencies ensuring that servicers follow legal guidelines and consumer protection laws.
  
  

Mortgage Lender vs. Mortgage Servicer

It’s important to understand the difference between your mortgage lender and your mortgage servicer. Here’s how they differ:

• Mortgage Lender: This is the financial institution (like a bank or credit union) that approves and gives you the loan for purchasing your home. They provide the funds for the mortgage at closing.
  
  

• Mortgage Servicer: This is the company responsible for managing your mortgage after closing. This may or may not be the same company that originated your loan. Their main role is to process your monthly payments, handle escrow, and respond to any questions or concerns you have regarding your mortgage.
  
  

What Does a Mortgage Servicer Do?

Your mortgage servicer has several important responsibilities that keep your mortgage on track:

• Process Your Payments: They ensure that your monthly mortgage payments are applied to the appropriate accounts (principal, interest, insurance, taxes, etc.).
  
  

• Escrow Management: They manage your escrow account and pay taxes and insurance on your behalf.
  
  

• Answer Questions: If you have questions about your mortgage, including concerns about your payments or interest rates, the servicer is your go-to contact.
  
  

• Loss Mitigation: If you're having trouble keeping up with payments, your servicer will work with you on solutions like forbearance or loan modifications.
  
  

• Foreclosure: In unfortunate circumstances, if foreclosure becomes necessary, the servicer is the entity that initiates the process.
  
  

Why Should You Care About Mortgage Servicing?

Even if you don’t interact with your servicer often, it’s crucial to know who they are. If you ever encounter issues with payments, need to adjust your payment schedule, or need assistance managing escrow, they are your point of contact. Also, if your mortgage servicing rights are transferred, you want to be sure you know where to send your payments and avoid confusion.

The bottom line: Pay attention to any communication from your mortgage servicer, especially if it’s regarding changes to your payment process or who is responsible for servicing your loan.

Final Thoughts: Keep Informed and Stay Ahead

Navigating your mortgage after closing might seem like a simple task, but understanding the role of your mortgage servicer can make the entire process smoother. By staying informed and communicating with your servicer when necessary, you can ensure that your homeownership experience remains stress-free.

Disclaimer: This information is for general knowledge and informational purposes only and does not constitute financial, tax, or legal advice. We are not lawyers, financial advisors, accountants, loan officers, or mortgage brokers. Please consult with a qualified professional to understand your specific needs.