If the lender keeps the loan and services it in-house, you’ll continue to deal with them directly. That’s who you’ll send payments to and who you’ll work with if you need a forbearance.
This company is your ‘mortgage servicer’ – it will collect your payments and manage your loan for as long as you keep it.
What do mortgage servicing companies do?
For one, t hey collect your monthly payment and distribute it to all of the relevant parties. A portion goes to your lender, some goes to property taxes, homeowners insurance premiums get sent to your carrier, and so on.
For instance, if your home has reached 20% equity and you want to talk about getting rid of PMI, your servicer is the company to contact.
Or, if you’re having trouble making payments and need to ask for mortgage forbearance, your servicer would handle that change as well.
Do any lenders service their own loans?
- Lenders want to save on administrative costs
- They want to streamline the number of loans they’re managing so they can focus on originating new loans. This may be more cost-effective than providing servicing to all their customers
- Lenders can also make a profit on loan sales
When another company does buy the loan, they also have the option to manage it in-house or to sell collection rights to a mortgage servicing company.
Mortgage servicer FAQ
When your mortgage is sold, your lender transfers the loan and its management to a third party. The sale doesn’t change the terms of your mortgage, but you may have to send payments and inquiries to the new owner’s servicer.
Your mortgage servicer handles your payments, as well as forbearance requests and other issues you have with your loan, so it’s important to know who your servicer is.
But since you don’t have control over who the servicer is, it’s best to focus on finding the best possible mortgage product and interest rate, rather than worrying about who you’ll make payments to down the road.
No, borrowers do not choose who services their mortgage. If you’re unhappy with your servicer, you’ll need to refinance to a new loan, using a lender that does not work with that servicer.
However, the new loan could be sold to your current servicer eventually, so it’s not worth refinancing just to change who manages your loan.
The servicer should be listed on your monthly mortgage statement. You can also look up your loan servicer through the Mortgage Electronic Registration System (MERS) database.
A mortgage lender loans you the money for your home purchase. The lender is the company you’ll work with to set up your loan – from application through to closing.
A mortgage servicer manages the account after it’s closed, including monthly payments, PMI cancellation, forbearance requests, and any moves you make to pay off your mortgage early.
Lenders and servicers sell loans for different reasons. They may sell to have more liquid cash, or they may want to reduce their overhead since loan servicing requires personnel and other resources.
Check your monthly mortgage statement or look up who your servicer is through the MERS website. Once you have your servicer’s name, you can likely find their contact information through its site.
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Once a lender closes your mortgage loan – meaning you’ve signed the final documents and received the money – they can either keep your loan and service it in-house or sell it.