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Key takeaways
- Mortgage lenders create and fund home loans, while mortgage servicers manage the loan after closing, including repayment and relief options.
- You can choose which mortgage lender to work with, but you can’t choose your servicer. Typically, your mortgage gets transferred to a servicer immediately after closing. After that, your mortgage could be transferred multiple times to other servicers.
- You can find out who services your loan by checking your mortgage statement.
Most borrowers use the term “mortgage lender” to refer to the company they send their mortgage payment to. Often, though, the lender only handles creating and funding the loan. From there, it’s common for lenders to hand over loans to a mortgage servicer.
Differences between mortgage lenders and mortgage servicers
Key terms
- Mortgage lender
- Mortgage lenders provide money borrowers use to buy, build or make improvements to homes. They also provide refinancing options.
- Mortgage servicer
- A mortgage loan servicer takes care of the loan’s day-to-day administration until the borrower pays it off.
Some lenders do their own mortgage servicing, but many aren’t large enough to deal with that part of the business profitably. These lenders often hand that task off to a mortgage servicing company.
What do mortgage lenders do?
Mortgage lenders handle the origination and funding of mortgages. The origination process includes:
- Helping borrowers choose a home loan
- Taking the mortgage application
- Processing the loan
- Underwriting the loan
- Drawing up loan documents
- Funding the mortgage
- Funding the loan
Once mortgages close, most lenders send the loans to a servicing company. Your closing documents might indicate that your loan will be transferred upon closing, or you might be notified of a transfer after closing.
Some lenders do their own mortgage servicing, and some borrowers prefer to work with a lender that services its own loans. Before applying for a loan with a particular lender, you can ask whether it outsources servicing.
If your lender doesn’t service its own loans, don’t panic — many lenders don’t. If you’re like most borrowers, you’ll likely have set up automatic payments, so you’ll have minimal interaction with your servicer.
What do mortgage servicers do?
The mortgage loan servicer picks up where the mortgage lender leaves off. Once the lender transfers the loan, the servicer takes over tasks such as:
- Taking and processing payments
- Tracking loan balances and interest paid
- Generating tax forms
- Managing escrow accounts
- Overseeing loss mitigation programs
- Initiating foreclosure if the borrower defaults
- Processing requests to cancel mortgage insurance
Your mortgage loan servicer might also report your loan payments to the credit bureaus. If you suspect an error with how your mortgage payments were reported, contact your mortgage servicer and the credit bureau, not your mortgage lender, to get it corrected.
How to find your mortgage servicer
You should be able to find your current servicer on your latest mortgage statement. Alternatively, you can contact your mortgage lender to ask where your loan was transferred. Another option: the Mortgage Electronic Registration System, or MERS. If your loan is registered with MERS, you’ll be able to find it by searching on the MERS website with your property address or name and Social Security number, or by calling MERS toll-free at 888-679-6377.
What happens when my loan moves to a new servicer?
Transferring the loan to a mortgage servicer does not change the terms of your mortgage — you’re simply sending your payment to a different recipient, and you might get a new account number.
When your lender transfers your loan to a mortgage loan servicer and you were not notified at closing, you’ll receive two letters: a “goodbye” letter from your mortgage lender and a “hello” letter from the mortgage servicing company.
In most cases, your mortgage lender must send the letter at least 15 days before the effective date of the transfer. The effective date is when the first mortgage payment is due at the new servicer’s address. The new servicer must send their letter within 15 days following the effective date of the transfer.
Some borrowers get one letter from both the new and old company. If that’s the case, you must get it at least 15 days before the transfer takes place.
Both notices will contain:
- The name and address of the new servicer
- The date the mortgage lender will stop accepting your mortgage payments
- The date the new servicer will begin accepting your mortgage payments
- Telephone numbers for the old lender and new servicer
- A statement that the transfer does not change the terms of your mortgage
- A statement explaining your rights, and what to do if you have a question or complaint about the servicing of your loan
Keep in mind: You can’t be charged a late fee if you mistakenly send your mortgage payment to your lender or the old servicer within 60 days of transfer.
Can you change your mortgage servicer?
Unfortunately, you don’t get any say in the company that services your loan. If you want to avoid mortgage servicing companies, you can choose to deal only with self-servicing lenders when applying for a mortgage. If you encounter problems with your servicer, make a note of all your interactions and, if required, file a complaint with the Consumer Financial Protection Bureau (CFPB).
If you already have a mortgage and aren’t happy with your mortgage servicer, you can refinance your loan to a new one with a different lender who services the loans they originate. Bear in mind, there’s no assurance they will manage loans for the long haul, even if they’re doing so currently. You also don’t want to refinance solely to get a new servicer — getting a new loan should net you some other benefits too, like a lower interest rate.
Mortgage lender vs. mortgage servicer FAQ
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Yes, the same institution that funds your home loan can also be responsible for managing it.
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If you simply need clarification regarding the details of your mortgage, contact your lender or servicer directly. If you’re facing financial hardship and need help with payments, contact your servicer as soon as possible to learn about options like forbearance. If you suspect unscrupulous practices, you can file a complaint with the Consumer Financial Protection Bureau online here or by phone at 855-411-2372. If you believe you’ve encountered housing discrimination, you can report it via the U.S. Department of Housing and Urban Development (HUD) website here, by phone at 800-669-9777 or by mail to a regional Fair Housing office.
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