A loan servicer is an entity that collects monthly payments on loans and remits them to the note holder on a monthly basis. Loan servicers also manage escrow accounts for the payment of taxes, insurance and mortgage insurance, provide year end interest statements, and notify borrowers of any changes in escrow requirements on an annual basis.
Servicers receive a fee from the note holder[s] for performing these services. Another service that is provided is collection activity. If any legal action is required to be taken against the property and the borrower, the loan servicer is the entity that takes such action.
It is important to note that no changes in principal & interest payment amounts, note rates [for fixed rate loans], margins at adjustment [for Adustable Rate Mortgages], or the ability to pre-pay can be made as long as there is no default provision being violated by the borrower.
Answer Submitted on Tue, Feb 17 2009
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