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Why There is a Need to Understand the Mortgage Service

By DJ Willis Subscribe to RSS | February 18th 2012 | Views:

Most folks have discovered mortgage servicing, but few understand exactly what it is and just how it influences a homeowner's mortgage as well as the lenders. This type of servicing handles and procedures financial transactions such as accepting and recording the payments including late payments and assessing claims or liens associated with the property.

Other duties of the servicer include determining the variable interest rates which are employed for adjustable rate loans and make payment on insurance and taxes from the escrow accounts which have been set up. Additionally they negotiate workout packages and adjustments to the event of a default. Supervising or conducting the entire process of foreclosure is yet another function the service can provide.

The mortgage industry has faced plenty of good and the bad the past several years. Many changes have occurred, and some of those changes involved the mortgage servicing areas of most mortgages. Homeowners have become frustrated when their mortgage has been transferred to another financial institution. Often the mortgages are improperly handled resulting in extreme difficulties for that homeowner.

Many homeowners believe the servicer is lender. They are often the lending company, but many times the beneficial rights are sold to investors. These rights range from the payments of both principal and interest on the mortgage in question. The investors include some well known names in the market in addition to private investors that cope with mortgage securitization transactions.

Recently, some mortgage servicing companies happen to be suspected of unsuitable business practices. Among the pitfalls associated with the practice is that payments are not remitted to the account. Extra fees are then charged to the homeowner and may result in foreclosure whether it continues. Maybe it's a simple administrative error, or it could be deliberate misappropriation of funds.

Another practice that can be detrimental to the homeowner happens when the servicing company charges fees for inspections and collection letters. They might also charge additional interest to the homeowner. Nonetheless they have no legal right to demand the extra fees and interest. The servicing companies may also manipulate the homeowner's account so that it appears to be in default if this really is not.

Mortgage transfers are just a method for the original mortgage holder -- usually a bank -- to make money. But you do have rights with regards to mortgage servicing. For instance, the relation to your loan can't be changed. Also, there is a grace period which means there is no penalty should you accidentally send the payment to the old bank. Plus there is a complaint resolution process in case something happens.

Please be aware that it's necessary to keep thorough records of payments with copies of the checks or money orders used to make the payments. By doing this you can reconcile your records with the servicer's payment history. Look into the billing statements completely for any unwarranted fees or uncredited payments. Saving all your payment documentation might help resolve any complaints in your favor.

DJ Willis - About Author:
Jordan is very comfortable with mortgage software and giving a loan administration. He has been in the business going on 10 years now. Using mortgage servicing software can provide you with some insight regarding how to work certain mortgage situations.

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