Mortgage Servicing Compliance
A mortgage servicer is the company assigned to a mortgage holder that collects and processes monthly principal, interest, property taxes and homeowner's insurance. The loan servicer is responsible for compliance with several laws, which protects the consumer.
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Payment Credits
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The mortgage servicer is required to post payments to a mortgage holder's account on the date received. Failure to comply can result in fines to the lender from the Federal Trade Commission or state attorney general.
Escrow Credits and Balances
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Escrow accounts hold money added to a borrower's payment, accounting for property taxes and homeowner's insurance paid annually. The servicer must send the borrower a monthly statement of his escrow account balances, in addition to the annual statement of payments to the county tax assessor's office and the company issuing the homeowner's insurance.
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Transfers
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Loans are often bought and sold between mortgage companies. When this occurs, it is the responsibility of the previous servicer to contact the borrower and inform him of the new servicer's information. Additionally, the new service provider must also contact the borrower to inform him of the change. While servicers can change, the terms of the mortgage cannot.
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