What Are Mortgage Servicers?
When you make your mortgage payment every month, you want to know that it is applied to the proper loan and that your principal balance is decreased in the correct amount. To fulfill this need, mortgage servicing companies are used by mortgage lenders. Mortgage servicers fulfill a number of administrative duties related to mortgage loans.
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What Is a Mortgage Servicer?
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When you get a mortgage from a mortgage lender, the chances are that the mortgage lender does not actually handle your mortgage after that. The lender typically turns those responsibilities over to a mortgage servicer. This company then handles the basic duties that are associated with your mortgage loan. When you make your payment, it will typically go to a mortgage servicer. The servicer then receives your payment and processes it according to the standards of the mortgage lender. If you have an issue with your loan, you will likely contact your mortgage servicer instead of your lender.
Managing Escrow Accounts
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One of the most important responsibilities for mortgage servicers is handling the escrow accounts. Many mortgages have escrow accounts, where part of your mortgage payment goes into. These accounts are used to pay for the homeowner's insurance premium and the real estate taxes for the property. This type of account is used to protect the lender so that the house is protected from damage or tax issues. When the monthly payment is made, the proper amount has to be credited to the escrow account by the mortgage servicer.
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Other Responsibilities
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Besides handling the escrow accounts, the mortgage servicer also takes care of several other items in regard to your mortgage. For instance, when you send your payment to the mortgage servicer, it has to process the payment to the right account. If you do not buy insurance for your home, your mortgage servicer can purchase a policy for you. The servicer will also handle any customer service issues that may come up in regards to the loan. This company handles all of this so that the mortgage lender can focus on running its business.
Service
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Although the mortgage servicer does provide a number of services related to the mortgage industry, the customer service of these companies is notoriously lacking, according to the Mortgage Professor website. The reason behind this is because these companies have no incentive to perform well. Servicers receive a percentage of each mortgage payment and are only concerned with making the mortgage lender happy. You cannot get out of paying your mortgage unless you want to lose your home, so the servicer knows that nothing can be gained by providing great customer service, the Mortgage Professor says.
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