Loan Servicing
Loan servicing refers to the administrative management of your mortgage after closing—collecting monthly payments, managing escrow accounts for taxes and insurance, handling customer service, and processing payoffs. Your loan servicer may be different from your original lender, as servicing rights are frequently sold in the secondary market.
Servicers act as the administrative backbone of the mortgage system. They send monthly statements, process payments, disburse tax and insurance payments from escrow, manage forbearance and modification requests, handle delinquencies, and initiate foreclosure proceedings when necessary. Most large banks and dedicated servicers like Mr. Cooper, Nationstar, and Cenlar service billions of dollars in loans. Some direct lenders retain servicing in-house after your loan closes, meaning the company you applied with is also the company you make payments to—which many borrowers prefer for continuity.
The sale of servicing rights is very common. The lender who closed your loan may sell the servicing to another company within weeks or months of closing. By law (RESPA), your current servicer must notify you 15 days before the transfer, and the new servicer must notify you within 15 days after taking over. During the 60-day period after a transfer, you cannot be penalized for sending a payment to the old servicer.
When problems arise with your servicer—misapplied payments, incorrect escrow calculations, disputed charges—RESPA gives you the right to submit a Qualified Written Request (QWR). The servicer must acknowledge your QWR within 5 business days and respond within 30 business days. If the servicer doesn't correct an error, you can escalate to the CFPB.
Key Takeaway
Loan servicing refers to the administrative management of your mortgage after closing—collecting monthly payments, managing escrow accounts for taxes and insurance, handling customer service, and processing payoffs. Your loan servicer may be different from your original lender, as servicing rights are frequently sold in the secondary market.
Related Terms
Frequently Asked Questions
Continue making payments on time—you get a 60-day grace period for the new servicer during a transfer. Update your payment method to direct payments to the new servicer. Verify your account balance, escrow balance, and payment history transferred correctly.
Not usually. Originating lenders often sell servicing rights based on financial decisions unrelated to borrower preference. You can ask upfront whether a lender retains servicing, but there's no guarantee.
Submit a Qualified Written Request (QWR) in writing to the servicer's designated error-resolution address. Document the error with payment receipts and account statements. The servicer must investigate and respond within 30–45 business days.
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