It involves managing a loan throughout its lifetime, from origination to repayment. In order to understand the role of mortgage servicing better, it is essential to look at what exactly it entails and how it works.
Mortgage servicing is the process that starts from the moment a borrower takes out a loan until it has been completely paid back or refinanced. The mortgage servicer is responsible for collecting payments, handling taxes, insurance, and escrow accounts, as well as providing customer service regarding the loan.
First, the servicer must set up the loan by collecting all pertinent background information. This includes the borrower's credit history, income level, debt-to-income ratio, and other financial information. The servicer then verifies this information and sets up an escrow account for payment of taxes and insurance premiums.
After the loan is established, the servicer begins collecting payments from the borrower. They also handle any customer service inquiries and keep records of the payments. Mortgage servicers often make changes to the loan terms if requested by the borrower, such as changing the amount of the payment or switching from one loan type to another.
The servicer is also responsible for the tax govenment, which includes paying any taxes due on the property, collecting delinquent taxes from the borrower, and making sure the taxes are paid in full each year. They also handle the homeowner's insurance policy and will notify the lender if the borrower fails to make the required payments.
Finally, the servicer works with the borrower when the loan is set to be paid off. This can involve providing a payoff statement, coordinating with the borrower to ensure the loan balance is paid in full, and informing the lender when the loan has been paid off.
In summary, mortgage servicing is an essential part of the mortgage industry. It involves taking care of the entire loan, including origination, payment collection, escrow management, customer service, and loan payoff. Through their services, mortgage servicers help to ensure that borrowers are able to successfully repay their loan and continue to live in their homes.
This article was contributed on Nov 02, 2023