When a homeowner gets a mortgage, they often think that the bank that loaned them the money will hold the loan and service it until it is paid off in thirty years. In today’s modern mortgage market, though, that is usually not the case because mortgage loans and the rights to service them are frequently bought and sold. In many cases, the company to which a homeowner sends payments is not the company that owns the loan. Usually it is a “mortgage servicer.”
A mortgage servicer (or the “servicer” as it is known in the mortgage industry) is a company that handles the “day-to-day” management of a mortgage loan account. A servicer’s responsibilities include collecting and crediting monthly mortgage payments, managing escrow accounts, paying real estate taxes and homeowner’s insurance bills, and responding to customer questions and complaints. The servicer also direct the money that they collect to the banks or investors that hold the loan. In this way, servicers can best be described as “middlemen.”
Some of the largest mortgage servicers in the country are stand-alone companies, but others are branches or subsidiaries of major banks. For example, BAC Home Loans Servicing is a subsidiary of Bank of America. Homeowners who first had a loan from Bank of America often fail to realize that their loan is being serviced by BAC.