Amortization Schedule

Loan Periodic Table.

Archive for the month “October, 2012”

Mortgage Services and Mortgage Service Providers

Have any idea what will happen to one’s housing loan after signing the loan contract? Many borrowers are misled to the idea that all institutions from which the loan originated will be the one servicing the loan.

But, this is not entirely true because most companies’ mortgage services are bundled and sold to higher financial institutions or mortgage service providers, days after their housing loan is services

Increase in the rate of this financial practice is observed and a stature entitled National Affordable Housing Act specifically addressing and regulating this practice has already been passed and is currently being implemented. This enactment provided guidelines to mortgage service providers that provides for various rules and regulations to follow on the course of the loan servicing.Indeed, it should be understood by borrowers since they are the main stake holders of their loan and for them to file necessary inquiries and complaints if unnecessary disputes took place.

As provided and maintained by the country, mortgage services are as follows: setting up a monthly amortization schedule, collecting monthly payments and handling borrower’s escrow accounts, and making yearly report detailing the escrow account, account balances and tax payments insurance pay-out. These are the mortgage services that should be observed meticulously by these service providers.

Aside from these main services, those providers should also comply with the terms and agreements provided by the National Affordable Housing Act. These provisions are as follows: providing the details of the loans, informing the borrower that his or her loan will be sold to mortgage service providers and responding to written and formal complaints if any

These are some of the necessary information a borrower should know after he or she closed a loan contract. This is essential because once mortgage services were not appropriately delivered and a mortgage service provider despite various written inquiries about the undelivered service failed to comply with such demand, the borrower can do various serious actions against the provider. One of which is to file a direct complaint through the nearest local or state office of consumer protection. The borrower can also opt to go to the Department of Housing and Urban Development (HUD) if the requests are continuously ignored. The borrower can file a complaint there under the National Affordable Housing Act or the HUD’s Office of Single Family Housing. Aside from that, the borrower can also have her complaint directed to the Correspondence Branch of the Federal State Commission. And for further legal actions and consultation, the borrower can forward his or her case on an attorney


Mortgage Service Center – an Entity between Mortgage Lender and Borrower

What is a mortgage service center? Well, a it is an entity that acts as and has the responsibility of daily maintenance of any mortgage loan. In most cases, when a borrower get a loan, the lender will just process the loan, the daily transactions are often given to another company – who are the service center. In taking these works, they will gain a small portion of the mortgage interest, perhaps 0.6%.

We are aware that most mortgage payment is paid monthly. Every time a monthly mortgage is paid, these mortgages servicing company will be the one that handles these payments, gets their share of the mortgage, and gives the rest to the lender and send out a new statement to the mortgage owner. The center can change several times in the duration of the load, depending on the preferences of the service center

Let’s take a typical scenario of US based service center. If the company was change by the lender, then the borrower will gain rights along it as well. Firstly, notification regarding these changes must be sent out to the borrower 15 days in advance.  Accompanied with this is an extended grace period in case the borrower sends out the payment to the previous mortgage service company. In most cases, this grace period has duration of 60 days. To learn more about these provisions, they are detailed and cannot be amended in the United States Federal law.

Now, you can see that being or having mortgage service center is a great business, for most people make their payments monthly. There might be late payments of course, but because of the advancement in technology, processing and daily maintenance of these loans is becoming fast, easy and more efficient on the part of the center for all transactions are now automated. A sample of these automated paying is electronic payments.

On the downside, the cost for mortgage service is increasing dramatically every time a borrower fails to pay on time because they must make sure that payments are done promptly. The cost increases due to the pursuing of these borrowers. Nevertheless, when a lender partners with a mortgage center, these typical scenarios are usually added as additional fees for them and are billed on the borrower’s next mortgage payment.

In some cases that the borrower still fails to pay the mortgage, some lender and mortgage center result to foreclosing the property for auctions. They can handle the foreclosure or give it to the bank which will be another entity of these transactions. But this still depends on the agreement among the lender, the bank and the mortgage service center.

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