What is mortgage servicing and why does it matter?

After you close on your mortgage, one of the mortgage terms you may become aware of is mortgage servicing. Mortgage servicing involves the management of the collection of mortgage payments. But more than that, your mortgage servicer is your first point of contact if you have questions or need to reach out for help.

Defining mortgage servicing

Mortgage servicing is the management of your home loan once it’s closed on behalf of the investors in your mortgage.

Servicers perform duties as varied as processing payments, answering questions, detailing your remaining balance and interest paid, and maintaining escrow accounts you may have for the payment of property taxes, homeowners insurance and mortgage insurance.

Before your loan closes, you’re in the origination phase. This is distinct from servicing. Lenders are mortgage loan originators. During origination, the lender takes your application, underwrites your loan, orders a home appraisal, and handles your closing. From there, your servicer manages everything between closing and your loan payoff.

What do mortgage servicers do?

Mortgage servicers manage your home loan on a day-to-day basis once you close. This involves a range of duties:

• Collect payments: Mortgage servicers collect your payment each month. Principal and interest payments are forwarded to investors in your loan.
• Manage escrow accounts: If you have an escrow account for the payment of real estate taxes and insurance, servicers manage this. They’re responsible for the disbursement of funds from your account to insurers and government authorities.
• Create and send statements and disclosures: Your servicer is responsible for sending mortgage statements each month. They’ll also send end-of-year tax information.
• Handle late payments: if you’re past the due date and grace period for your mortgage, servicers handle the payments and the collection of any fees permitted under your contract.
• Help prevent foreclosure: If you start struggling with your mortgage payment, it’s your servicer’s job to help qualify you for options to prevent the physical, financial, and emotional impact of a foreclosure on your home.

Can my mortgage servicer change?

Yes. There are a variety of reasons your existing servicer may sell your mortgage servicing rights. This may happen after you close or at any time during the life of your loan.

Rocket Mortgage^® is both a lender and a servicer of the mortgages we originate. This isn’t the case for all lenders, so the servicing for your mortgage may be sold shortly after you close.

In other cases, servicers may purchase your loan down the line for business reasons. For a lender, servicing can bring some money in at a time when fewer loans are being closed. They may also see an opportunity to start a relationship with you so that you’ll consider refinancing with them to accomplish your future goals.

During a mortgage servicing transfer, you’ll receive communication from your outgoing servicer and information on onboarding from your new servicer. While your account and where you send your payment changes, there’s no effect on your existing mortgage terms.

How mortgage servicing affects you

So what should you expect from your mortgage servicer? Here are a few things to know:

• Payment processing: Servicers collect the principal and interest associated with your loan and pass it along to investors. They also collect payments for and pass payments from your escrow account to the appropriate parties.
• Statement timing: While the mortgage billing cycle can vary depending on whether you’re paying monthly or biweekly, you’ll get at least one statement per month, arriving well in advance of when your monthly payment is due.
• Borrower communications: If your servicer has messages for you, these will often be delivered on your statement, through the payment portal, or both.

What to do if there are issues with a mortgage servicer

Occasionally, there may be problems with the servicing of your mortgage. Some are on the servicer and others aren’t, but regardless of who’s at fault, it’s not easy for the borrower to deal with.

If you have misapplied payments, that’s something you should take up with your servicer, and we’ll discuss how to approach these issues in a minute.

Another common trouble spot is an escrow shortage. Escrow shortages involve the amount being set aside for escrow not matching up with the amount necessary for homeowners insurance and property taxes.

The most common reason for an escrow shortage is an update in your property taxes. While lenders analyze escrow once per year, the timing often doesn’t line up because localities will do their tax assessments in all different months. You can spread the shortage throughout the year or pay it in a lump sum.

If you have an issue with the servicing of your mortgage, the first thing to do is contact your servicer. You should find this either on your statement or through the servicer’s portal. If you strike out there, there’s also a lookup from Mortgage Electronic Registration Systems Inc. (MERS).

If your servicer isn’t responding to your concerns to your satisfaction, you do have rights under the Real Estate Settlement Procedures Act (RESPA). Under Regulation X, your servicer is responsible for various items including the following:

• Periodic billing statements
• Notification of interest rate adjustments for adjustable-rate mortgages
• Prompt payment application and pay off statements upon request
• Providing available mortgage relief options
• Helping with error resolution and information inquiries

If you have an issue, there are several places you can look to file a complaint including:

• Consumer Financial Protection Bureau
• State Attorney General

How Rocket Mortgage handles mortgage servicing

Rocket Mortgage aims to provide our clients with the clarity and answers they need whether you’re calling in with a question about your escrow account or dealing with something as serious as figuring out what to do about your mortgage after a job loss.

You have our commitment that our conversation will be adaptable to your unique situation. You’ll be treated with the empathy and respect everyone deserves, no matter what they’re going through. And we don’t charge you a fee just for advice or making a payment.

We also have a variety of self-service options available to help you address many issues related to your mortgage 24/7:

• Rocket Mortgage servicing account: With your Rocket Account, you’re able to do things like make payments, find statements and tax information, and get a read on your existing equity.
• Mobile app: Our mobile app is the best way to take your mortgage management on the go through your phone or tablet.
• Any time phone payments: Make your mortgage payment at all hours of the day and night through our interactive voice response system at (800) 646-2133.
• Rocket Assist: Powered by the same technology our clients have come to know during the mortgage process and with additional knowledge provided by the Learning Center you’re reading right now, you can use our chat bot to start your mortgage application or have many of your questions answered.

Our self-service options are great, but mortgage questions are highly unique and sometimes cause stress. There’s no replacing the human touch. We have team members trained in specialized processes available via chat, phone, and email to handle any question.

FAQ

Now that you know the basic outlines of mortgage servicing, let’s go ahead and answer a few more questions.

Can a mortgage lender and a mortgage servicer be the same entity?

Yes. Rocket Mortgage is both a lender and a mortgage servicer.

Does a mortgage servicer own the loan?

No. Mortgage servicers forward principal and interest payments to market investors who own the loan.

Who pays mortgage servicers?

Investors pay mortgage servicers. This may be via a flat fee or a small percentage of the amount collected each month.

The bottom line: Working with your mortgage servicer

Mortgage servicers manage the day-to-day administration of your mortgage once your loan is originated. This includes anything from collecting your payments and administering an escrow account to answering questions and providing options for mortgage relief.

Your servicer may or may not be your lender. Rocket Mortgage is both a servicer and a lender. Whether you want to get in touch or just explore what’s available to you, we encourage you to check out your Rocket Account.