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Servicing

Servicing

What is Servicing?

Servicing is the process in which a financial institution collects the payments of a loan. After the loan is originated, fully underwritten, and funded, the monthly payments begin. Property investors, homeowners, and landlords often pay a "servicer" the monthly payments outlined in the loan documents.

Once the loan is originated, the lender typically needs to "sell off" the loan to another provider. This allows them to get back the capital and then use it to lend to more borrowers. Conforming mortgages in the United States are typically sold off to government sponsored entities like Freddie Mac and Fannie Mae.

The servicer will collect the Principal, Interest, Taxes, and Insurance associated with the loan.

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