Mortgage servicing

Oftentimes, you will not make monthly payments directly to the lender who originally finances your mortgage. Instead, you will deal with a mortgage servicer, who manages your account administration.

In some cases, your lender will sell the mortgage to another party, who will become your mortgage servicer. In other cases, your lender will hire a mortgage servicer to deal with the maintenance of your account. Either way, your relationship with your mortgage servicer will be more or less the same.

More importantly, the original terms of your mortgage will stay the same. A mortgage servicer cannot raise your interest rate; your original agreement will be honored.

The mortgage servicer’s basic responsibility is to collect your payments. They will send your monthly statements, and contact you if a payment is ever late. In many cases, they will also manage your escrow account, which is used to pay tax and insurance fees. Scrutinize your monthly statements and make sure that the mortgage servicer is making these payments on time.

Once a year, your mortgage servicer will send a statement detailing your payments and how they were applied to your mortgage (e.g., how much went toward the premium, and how much went toward the interest). This statement can be extremely helpful when you are filing your tax return.

You may have a handful of different mortgage servicers over the life of your loan, or you may always deal with your original lender. In any case, keep careful records of all transactions you make, especially your payments. You may need them if you are audited or if you have a dispute with your servicer.