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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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