Friday, November 25, 2022

What Is Loan Servicing In Mortgage

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WHAT IS LOAN SERVICING?

Document processors are professionals who are responsible for managing the documenting processes and systems of an organization. These processors are required to organize documents after they have received and processed incoming documents such as texts and audio-visual formats. They must follow the data program techniques and procedures so that they can maintain data entry requirements and ensure quality assurance with all work completed. Document processors must also adhere to companies when handling materials, especially those with confidential information.

Now we’re going to look at the document processor profession. On average, document processors earn a $277,859 lower salary than loan servicing specialists a year.

A similarity between the two careers of loan servicing specialists and document processors are a few of the skills associated with both roles. We used resumes from both professions to find that both use skills like “loan portfolio,” “financial statements,” and “loan applications. “

On average, document processors earn a lower salary than loan servicing specialists. There are industries that support higher salaries in each profession respectively. Interestingly enough, document processors earn the most pay in the media industry with an average salary of $36,881. Whereas, loan servicing specialists have higher paychecks in the finance industry where they earn an average of $146,275.

Grace Period & Borrower Protections

The switch between loan servicers should be relatively smooth. But in case of any confusion, RESPA grants homeowners a 60-day grace period for 60 days from the date your loan servicing transfers, your new servicer cannot charge you a late fee or treat the payment as late if you sent it to your previous servicer on time or within the applicable grace period. This protects mortgage holders who may send their mortgage payments to their old servicers accidentally. It also serves as a cushion for borrowers who need to reroute automatic electronic payments to their new servicer’s address.

Dealing With Servicer Problems

If youre having problems with your mortgage loan servicer, I may be able to help you. While servicers are often slow to respond to homeowners, that may respond more quickly to an attorney. You may also be able to sue your servicer for money damages when its conduct causes you harm. That can include wrongly reporting payments as delinquent to credit bureaus , improperly handling a request to modify a mortgage loan or failing to comply with foreclosure laws.

If youre having problems with your loan servicer, you have nothing to lose by contacting me. Theres no charge for an initial phone conversation.

Below is a list of some common loan servicing problems and abuses:

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Mortgage Lender Vs Mortgage Servicer

  • The bank or mortgage lender processes and funds the home loan
  • Once it closes it may be sold off to a loan servicer or retained in portfolio
  • The job of a loan servicer is to collect monthly mortgage payments
  • And manage escrow accounts if your home loan has impounds

As noted, a mortgage loan servicer, also known simply as a loan servicer, is the company that collects your monthly mortgage payments.

They also manage your escrow account if your home loan has impounds, collecting a portion of property taxes and homeowners insurance each month, before making those payments on your behalf when due.

So really, theres a good chance youll deal with your loan servicer a lot more than your mortgage lender, who may have only been in the picture for a month or so while your loan was originated.

You see, many mortgage lenders focus on loan origination as opposed to servicing, so theyre happy to fund your loan and quickly sell it off for a profit, then rinse and repeat.

The same goes for mortgage brokers, who fund your loan on behalf of a wholesale mortgage lender, which also may sell off the loan to a different servicing company shortly after it closes.

Further complicating all this is the fact that your mortgage lender could also be your loan servicer because some big banks and mortgage companies can profit from it.

One thing mortgage companies figured out in recent years was that keeping in touch with their past customers was a great way to generate repeat business.

How Will My Loan Be Serviced After Closing

HOME LOAN SERVICING SOLUTIONS, LTD.

Better Mortgage will service your loan after it closes. During this time, payment administration and collection will be handled by our sub-servicing partner, called The Money Source .

At some point, we might transfer your loan to a permanent servicer. We have a large roster of reputable servicers and mortgage investors including major US banks, government-sponsored entities, publicly-traded mortgage companies, and specialized servicing firms. We collect third-party reviews and survey our borrowers post-transfer to ensure the permanent servicers are quality partners.

TMS will notify you if and when your loan is being transferred. In the event your loan is not transferred you will continue to make payments to TMS.

Related questions

Home lending products offered by Better Mortgage Corporation. Better Mortgage Corporation is a direct lender. NMLS #330511. 3 World Trade Center, 175 Greenwich Street, 59th Floor, New York, NY 10007. Loans made or arranged pursuant to a California Finance Lenders Law License. Not available in all states. Equal Housing Lender.NMLS Consumer Access

Better Real Estate, LLC dba BRE, Better Home Services, BRE Services, LLC and Better Real Estate is a licensed real estate brokerage and maintains its corporate headquarters at 3 World Trade Center, 175 Greenwich Street, 59th Floor, New York, NY 10007. A full listing of Better Real Estate, LLCs license numbers may be foundhere. Equal Housing Opportunity. All rights reserved.

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When Youll Work With Your Mortgage Servicing Company

Knowing your mortgage servicing company is important in the event that you have to interact with the company outside of making your payments.

You might need to contact your mortgage servicer if:

  • You need to update your homeowners insurance information or ask a question
  • You believe your property has at least 20 percent equity, and you want to ask about removing private mortgage insurance
  • Youve been impacted by COVID or another financial setback, and you need to discuss mortgage relief options
  • You lost your job or had a decrease in income, and you need to request forbearance to keep your mortgage in good standing

Of course, theres a good chance that none of these ever apply to you.

And in that case, you might continue making mortgage payments to your servicer without ever having to worry about who that company is or the quality of its customer service.

What Loan Servicers Mean For Borrowers

When a borrower takes out a loan, the lender decides who will service that loan. Its important to know who your loan servicer is because you will have frequent contact with that company.

To find out who your loan servicer is, contact the lender you secured the loan through. It may also say who the loan servicer is on your annual or monthly statement.

Aside from making payments on your loan, you can contact your servicer if youre having trouble making your monthly payments or have questions about your loan.

Occasionally, borrowers run into issues with their loan servicer and want to switch to another. This is really only an option if you refinance or consolidate your debt, otherwise, you cant change your loan servicer. If you have trouble with a servicer withholding important information about your loan, you can file a complaint with the Consumer Financial Protection Bureau , or the Federal Student Aid Office of the Department of Education . If you believe your servicer is committing fraud, you can also file a report with the Federal Trade Commission .

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Why Do Mortgage Companies Change Servicers

Mortgage servicers earn fees for servicing your account and from time to time mortgage servicers may decide to sell the rights to service your mortgage to another company. Your consent is not required for the sale of your mortgage and your loan may be sold multiple times.

  • Services are diversified in three groups Business services, social services and personal services.
  • Business services are the services used by businesses to conduct their business activities. …
  • Social services are the services provided by NGO’s to pursue a certain set of social goals.

When Theres A Change Of Servicers

What is Mortgage Servicing?

At closing, your lender must inform you of any plans to turn over the rights to administer your loan to a mortgage servicer, as often happens when a mortgage is sold. The new servicer could be another lender, a bank, an investor or a third-party processing company that specializes in servicing mortgages. Over the term of your loan, you may have several mortgage servicers.

Rules of servicer changes

  • You must be notified in writing of the change by your original servicer and the new one, noting the date of transfer and contact information of the new servicer.
  • The new servicer must honor the terms and conditions of your original mortgage agreement, with the exception of those directly related to servicing the loan.
  • You must be notified of any changes to terms of your homeowners insurance.
  • During the transfer, you have a 60-day grace period during which you cannot be charged a late fee if you mistakenly send a mortgage payment to your old servicer.
  • You may ask any questions or voice any disputes you have with the new servicer in writing and continue to make payments while you settle the dispute.
  • Federal law requires the servicer to investigate your disputes and make any corrections within 60 business days.

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What’s The Difference Between A Mortgage Lender And A Servicer

Your mortgage lender is the financial institution that loaned you the money. Your mortgage servicer is the company that sends you your mortgage statements. Your servicer also handles the day-to-day tasks for managing your loan.

Your loan servicer typically processes your loan payments, responds to borrower inquiries, keeps track of principal and interest paid, manages your escrow account . The loan servicer may initiate foreclosure under certain circumstances. Your servicer may or may not be the same company that originally gave you your loan.

Tip: To find out who your servicer is, check your monthly mortgage statement or payment coupon book. If you cant find a statement or coupon, you can try the MERS® Servicer Identification System toll-free at 679-6377 or visit the MERS® website. MERS is a private company that maintains information about mortgage loans and servicers. Your loan servicers identity may be listed in the MERS system.

What Is A Mortgage Servicer

A mortgage servicer can be a major bank, community bank, credit union or other financial institution that specializes in loan servicing: collecting payments and handling customer service on a mortgage. A servicer can be small, handling 5,000 or fewer loans large, servicing more than 30,000 loans or somewhere in between.

Small servicers rarely service FHA loans,VA loans or USDA loans, and large servicers mainly service loans owned by Fannie Mae and Freddie Mac. Unsurprisingly, large servicers manage about three of every four mortgages.

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Who Are The Top Mortgage Servicers In The Country

1. Quicken Loans 10. Citizens Mortgage

Quicken Loans was the highest-ranked mortgage servicer for the seventh consecutive year in 2020, per the latest U.S. Primary Mortgage Servicer Satisfaction Study from J.D. Power.

Both USAA and Navy Federal actually have higher rankings than all the companies listed above, but dont meet the surveys award criteria.

In other words, you should have a very good customer experience with those two companies as well.

Common Features Of Loan Servicing Software

Cambridge Title Company Blog: February 2017

Given all the different hats that loan service businesses must wear, theres a ton of common software features for their software systems. These include:

Set automated requests for payments. Allow multiple payment options. Automatically withdraw funds from customers.
Analytics dashboard Get an easy-to-understand dashboard display of key metrics across multiple measurements. Automate reporting and customize dashboards with desired analytics.
Electronic signatures Gain efficiency through eliminating the back-and-forth common with paper signatures. Provide a more convenient experience for clients.
Document management Securely create, share, and store key documents between clients and investors.

This is quite the list, but again its important to keep in mind all the features that can benefit your loan servicing business. Obviously the must-have loan servicing software features are loan servicing and loan origination. These two core features lay the bedrock for your loan business.

Aside from them, its crucial you are able to properly communicate with current and potential clients and investors. This could be in the form of , or you could choose loan software that features strong customer and contact management tools.

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How A Servicer May Be Different Than Your Mortgage Lender

Understanding the difference between mortgage lenders and servicers might help clear up any confusion youre experiencing if youve been notified that youll need to start sending your mortgage payments to a different company. This often happens shortly after your mortgage closes, but it can happen at any point during your loan term.

If your mortgage is transferred from a lender to a servicer or from one servicer to another, you should get notices from both the company youre currently sending payments to and the one youll need to start sending payments to. The notices will tell you when to start paying the new servicer and where to send the payments. If you pay your mortgage automatically from your bank account, youll need to update your automatic payment details.

Even if your loan is transferred, your loan terms wont change, but you should check your statements carefully after a transfer to make sure no mistakes occurred during the process. Check these four things:

  • Your most recent payments were applied correctly.
  • Your principal balance is correct.
  • Your escrow balance is correct.
  • Any payments due to be paid from your escrow account have been made.
  • If you accidentally send your payment to your old servicer instead of your new one during the switch, you cant be charged a late fee during the 60-day grace period that starts on the date your loan is transferred.

    Customer Research And Resolution

    We leverage modern-day CRM and ERP systems to maintain accurate records of both existing and prospective customers. Maintaining such detailed records enables you to keep track of customer payment history, outstanding amounts, as well as customers who have showed interest in mortgages before backing out. Our back office support with the management of customer portfolios enables you to identify risks with customer payment. It also helps you manage and address customer queries more effectively.

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    Servicing Rights Of Loan Servicing

    The loan servicing rights are also sold, not just the loan. Servicing rights can be obtained with a Service Release Premium, or SRP, which is a function of the interest rate you and your loan officer selected. The lower the rate on the loan, the lower the SRP. Servicing rights can also be purchased throughout the life of the loan.

    When borrowers make a monthly mortgage payment, in all likelihood its not to the original lender. When the loan is sold, a servicing company takes over the day to day management of the loan. Loan servicers are paid by the entity that owns the loan by either taking a small percentage of the loan or charging the owner of the loan a fee.

    Mortgage Servicing Companies Matter More Than Ever

    Why Is Loan Servicing So Bad?: The Mortgage Professor #1

    Chances are, the company that you send your mortgage payments to isnt the owner of the loan or the original lender.

    Instead, payments are sent to a separate mortgage servicing company.

    Mortgage servicers tend to be out of sight, out of mind. You usually dont have to interact with them aside from sending monthly payments.

    But when you do need help from your mortgage servicer for instance, to remove PMI or request mortgage relief you want it to be a good experience.

    Heres what you need to know about mortgage servicers, including what to do if youre unhappy with your company.

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    Definition And Examples Of Loan Servicing

    Loan servicing is the process of ensuring that loan payments are collected from borrowers. For example, if you have a personal loan, your loan servicing company is the one that sends you monthly billing statements, processes your payments, responds to your requests, and maintains your loan records.

    Some well-known loan servicers include student loan servicers Nelnet, Great Lakes, and Navient.

    • Alternate name: Mortgage servicer, student loan servicer, payment servicer

    Who Is Involved With Mortgage Servicing

    This 4 minute video offers highlights from the description of mortgage servicing below.

    How does mortgage servicing work and who is involved? Broadly speaking, mortgage servicers work with four types of loans. The most common loans are backed by the government-sponsored enterprises, namely Fannie Mae and Freddie Mac, and are called GSE loans. Government loans are backed by the government, portfolio loans are kept by private lenders on their balance sheets, and private-label securities, or PLS loans, are purchased by private investors.

    Since the housing crisis, PLS loans have become a tiny portion of the market, and because portfolio loans resemble GSE loans in many aspects, we focus on government and GSE loans, as they constitute the bulk of todays mortgage loans.

    In addition to the servicer and the homeowner, the mortgage servicing industry consists of five key actors. Each of these five parties makes critical decisions that determine how a loan is serviced.

    First, there is the lender. After the loan is closed, the lender decides who services the mortgage. Generally, there are two ways for the lender to set up mortgage servicing:

  • The lender decides to service the loan itself, in which case the lender is also the servicer. When this happens, the homeowner makes monthly payments to the lender.
  • The lender can sell the right to service the mortgage to another entity, in which case the homeowner makes monthly payments to that entity, which becomes the servicer of record.
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