Mortgage Servicing

Understanding Mortgage Servicing

It’s no secret that almost all aspects of the mortgage industry have undergone some level of chaos in the past few years. During all of the changes and things that have taken place, many have affected the mortgage servicing aspects of mortgages, leaving homeowners confused and frustrated. Even worse, many forms of fraud have popped up, taking even the most cautious homeowners by surprise. To better understand the mortgage industry as a whole, we must first understand what mortgage servicing is and how it affects our mortgages and lenders in general.

Mortgage servicing is the part of a mortgage that handles keeping track of your payments, late payments, liens, and those aspects of your mortgage. Recently, as companies have been going under, their portfolios of mortgages have been changing hands between banks. This has lead to misunderstandings and extreme difficulties for those homeowners that have gotten caught up in the improper handling of their mortgages. To set yourself up for as little problems as possible, understand what you can do and what to expect in the event your mortgage becomes transferred to another bank.

First, it’s important that a mortgage transfer is nothing personal. It doesn’t relate to your credit worthiness or prior history, it’s simply a way for the bank that originally held the mortgage to make money. If this happens to you, make sure that your mortgage actually was transferred to a different bank and you did not simply receive a letter stating it was. Unfortunately, a common scam now is to send a letter to unsuspecting home owners stating that their mortgage servicing will now be handled by bank X when this never actually happened. Then, the homeowner dutifully sends a letter to bank X, allowing them to be taken advantage of.

It’s also important to understand your rights when it comes to mortgage servicing. First, your loan terms cannot change. Secondly, there’s a grace period. If you accidentally sent your payment to the original bank when it should have gone to the new bank or vice versa, this grace period assures that you cannot be penalized. And finally, know that there is a complaint resolution process in case anything happens. Most mortgages have a separate method of correspondence for complaints and you do not want to include your complaint with your payment. In the end, there’s no real reason to fear a mortgage change. They are part of business and with proper due diligence and understanding, you can make sure that everything goes smoothly on your end.