The information below is taken directly from, but a shortened version of, the Federal Trade Commission’s Consumer Advice website. Also check out this helpful fact sheet from the Consumer Financial Protection Bureau for more information.
What Is a Mortgage Servicer?
Did you know there’s a difference between your lender and your servicer? The lender is the company that you borrow the money from — typically a bank, credit union, or mortgage company. When you get a mortgage loan, you sign a contract and agree to pay back the lender.
The servicer is the company that handles the daily management of your account. Sometimes, the lender is also the servicer. But often, the lender arranges for another company to act as the servicer. It’s important to know your mortgage servicer because it’s the company that
- processes your mortgage payments
- answers questions about your loan balance and payment history
- pays your insurance and taxes, if you have an escrow account. An escrow account is where you set aside money to pay insurance and taxes. The account is managed by the servicer, who ensures that the lender knows the money is there to pay those bills when they’re due. To find the name of your servicer, check your mortgage statement or your coupon payment book. It’s not uncommon for your servicer to change. Within a few weeks of the change, you’ll get notices from your old servicer and your new one. The notices give you the contact information for the new servicer, the date they start accepting your payments, and what to do if you have a question or complaint.
How To Avoid and Fix Problems With Your Servicer
Typically, the servicer must credit a payment to your account the day they get it. That way, you don’t owe extra fees and the payment doesn’t look late to the lender. Late payments show up on your credit report and may affect your ability to get credit in the future. Too many late payments can lead to default and foreclosure.
Review and keep your records
Review all letters, emails, and statements when you get them from your mortgage servicer. Be sure their records match yours. Most servicers (except very small ones) must give you either a coupon book (often every year) or a statement every billing cycle (often every month). If your statement is late — even by just a few days — call the mortgage company to track it down in case there’s a problem with your account. If your account shows that you’re paying late, you could be in default on your loan. Late payments and a default are reported to a credit bureau and will appear on your credit report. That could affect your ability to get credit in the future. Get an explanation for anything you don’t understand.
If you get a notice that your servicer has changed, call your current servicer to confirm the new mortgage servicer — before you send in your next payment. This will make sure your payment goes to the right servicer, avoid delays in processing, and can help you avoid a scam.
Even if you don’t have any problems with the servicer, keep your mortgage statements, coupon books, records of your payments (for instance, canceled checks, bank account statements, online account histories), and every document you send to the servicer. If you have a problem down the road, you’ll want those records to confirm your payment history and any communications with the servicer.
Raise and resolve disputes or errors
If the servicer made a mistake or charged you a fee you don’t owe, correct it as soon as possible. But keep making your regular monthly mortgage payment. Don’t subtract the disputed amount from your mortgage payment. Some servicers will refuse to accept what they consider a “partial” payment. They could return your check and charge you a late fee, or claim that your mortgage is in default and start foreclosure proceedings.
Don’t write your dispute on your payment coupon or a copy of your monthly mortgage statement. Instead, contact your servicer in writing and explain the problem (known as a “qualified written request”)
- Use the Sample Complaint Letter to write your request, including your account number and an explanation of why you think your account is incorrect.
- Gather any documents that support your request. Your records should include copies of your statements, coupon book, and paperwork showing that you made your payments (for instance, canceled checks, bank account statements, online account histories, and other letters to the servicer). These can serve as proof of your payment history and your interactions with the servicer.
- Send your letter — and copies of any documents that support your request — to the mortgage servicer’s customer service address by certified mail, and request a return receipt. This may be a different address from where you send your payments.
- Keep a copy of your letter and the originals of the documents you sent.
Missing Mortgage Payments: Default and Foreclosure
Usually, if you miss one or more payments on your mortgage loan, your loan is considered to be in default, but you might have special rights during the during the COVID-19 pandemic. To learn more, read these resources from the Consumer Financial Protection Bureau: Mortgage forbearance during COVID-19: What to know and what to do and CARES Act Mortgage Forbearance: What You Need to Know.
In other circumstances, the servicer might order “default-related services” to protect the value of the property — like inspections, lawn moving, landscaping, and repairs. The servicer will charge your loan account for these services, which can add up to hundreds or thousands of dollars.
If the lender decides to move ahead with foreclosure, that process can also add hundreds or thousands of dollars in additional costs to your loan. That can make it even more difficult for you to keep up with payments, make your back payments, and keep your home.
If you’re facing foreclosure, stay in touch with your servicer and try to work out a plan to pay the back payments you owe, modify your loan, enter into a repayment plan, or get a temporary reduction or suspension of payments. If your loan was in default when your new servicer took over, they might be considered a debt collector and you may have additional rights.
The CFPB has more information about servicing your loan.