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Key takeaways

  • Mortgage lenders fund a home loan, while mortgage servicers handle the ongoing administration of the loan after funding, including repayment and loss mitigation, or payment relief.
  • It's important to know your mortgage servicer and keep track of any changes to ensure it sends payments to the correct place. If you auto-pay your mortgage, this might not be necessary.
  • You can find out who is servicing your loan by checking your mortgage statement.

Most borrowers use the term “mortgage lender” to cover all parties involved in their home loan. Oftentimes, though, the actual lender only handles the beginning part of the mortgage process. It’s pretty common for your lender to hand over your loan to a mortgage loan servicer after closing.

The difference 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 loan servicing 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 the loan. The origination process includes:

Once the loan closes, it will require ongoing administration, or servicing, until it’s paid off, so many lenders transfer it to a mortgage servicing company. Your closing documents may indicate that your loan is to be transferred or you may be notified of the transfer after closing.

What do mortgage servicers do?

The mortgage loan servicer picks up where the mortgage lender leaves off. Once the loan is transferred, the servicer takes over the ongoing administration of the loan.

Mortgage servicing can include:

  • Taking and processing payments
  • Tracking your loan balance and interest paid
  • Generating tax forms showing how much interest you paid each year
  • Managing escrow accounts (collecting and paying property taxes and homeowners insurance)
  • Initiating foreclosure if the borrower defaults
  • Performing loss mitigation to prevent foreclosure, in some cases
  • Processing requests to cancel mortgage insurance

Your mortgage loan servicer might also report your loan payment history to the credit bureaus. If you suspect an error, contact your loan servicer and the credit bureau, not your mortgage lender, to get it corrected.

How to find your mortgage servicer

Your loan servicer may change more than once during the life of your mortgage. You should be able to find your current servicer on your mortgage statement.

You can also contact your mortgage lender and ask where your loan was transferred. Another option is the Mortgage Electronic Registration System, or MERS. If your loan is registered with MERS, you’ll be able to find it by searching your property address or name and Social Security number. You can call toll-free at 888-679-6377 or visit the MERS website.

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.

Occasionally, you’ll 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 that for 60 days after the transfer, you cannot be charged a late fee if you mistakenly send your mortgage payment to the lender instead of the servicer.

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 with a different lender who services the loans they generate. Bear in mind there’s no assurance they will manage loans for the long haul, even if they’re doing so currently. When weighing the option of refinancing, make sure it offers more benefits to you than just a servicer change, like a reduced interest rate, shorter loan duration or more cash availability. Given that refinancing has its own costs, you should only consider this option if it aligns with your financial situation.

Mortgage lender vs. mortgage servicer FAQ

  • If your mortgage lender decides to sell your loan, your mortgage servicer will change. The new servicer will be responsible for managing the payment procedures and other administrative aspects of your mortgage.
  • Yes, the same establishment that funds your home loan can also be responsible for managing it. By choosing to service their own loans, lenders have the potential to provide superior customer service and a smoother journey for the borrower, as there’s no need to deal with a third party.
  • When it comes to tackling problems with your mortgage, there are many places you can turn to, each tailored to handle a specific issue. If you’re facing housing discrimination, contact the Department of Housing and Urban Development (HUD). If you’re dissatisfied with the services of your mortgage company, try to iron things out with them first. If this doesn’t pan out, the Consumer Financial Protection Bureau (CFPB) is a good next step for filing your complaint. You can report unscrupulous mortgage practices and scams to the Federal Trade Commission (FTC).

    If you’re looking for answers pertaining to your mortgage’s terms and conditions, your mortgage servicer should be your go-to contact.