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LESSON 25: MORTGAGE SERVICING
You've gotten your loan. You've settled into your
new home. The whole process is over and you never have to think
about mortgages again. Right? Sure ... if you don't mind throwing
away thousands of dollars! Smart consumers know to keep an eye on
interest rates, the speed with which they're building equity
and a number of other things as they pay off their loans. Opportunities
to save money -- and pitfalls that can lead to problems making monthly
payments -- will pop up over the years. Borrowers would be wise
not to ignore them.
 Calculate
your payment on any loan
First, let's talk a little bit about what happens
after closing. As we discussed earlier, many lenders sell their
mortgages after making them. When they do that, they often transfer
the rights to "service"
those loans to other lenders, banks, investors
and third-party
processing companies. That means an entirely new company will
likely be helping you with any mortgage-related problems.
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At closing, your mortgage lender must tell
you who the mortgage servicer on your loan will be. That company
will do some or all of the following:
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Collect and process your monthly
mortgage payment. The servicer has custody of the escrow
account and makes sure the tax
and insurance
bills are paid. It is the responsibility of the servicer to
make these payments on time. |
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Send you a statement at the beginning
of each year that shows what portions of your mortgage payments
during the previous year were applied to principal,
interest,
taxes and insurance. The servicer must also inform you of any
adjustments in payments needed to cover insurance and taxes
for the next year. |
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Forward your payments along to the
final investor
who owns your loan (if the servicer is not also the loan's owner).
The servicer will act as the investor's representative if any
problems arise with the loan. |
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Attempt to counsel and assist you
in overcoming any delinquency
if you start missing payments on the loan. |
(continued on next page)
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