Today we discuss what mortgage servicing means in the financial industry. This is helpful to now so that you are speaking the same language as the bank. When it comes to bank fees very few of us truly understand what we are being charged, and what we are being charged for. In this brief description I will try to explain the term mortgage servicing.
Mortgage servicing is usually understood as administration of a mortgage loan, including collecting monthly payments and penalties on late payments, keeping track of the amount of principal and interest that has been paid at any particular time, acting as escrow agent for funds to cover taxes and insurance, and, if necessary, curing defaults and foreclosing when a homeowner is seriously delinquent. For mortgage loans that are sold in the secondary market and packaged into a mortgage-backed certificates the local bank or savings and loan that originated the mortgage typically continues servicing the mortgage for a fee.
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