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Mortgage Sub Servicer and Your Rights

Mortgage Servicing and Your Rights

A mortgage servicer is a company that collects your mortgage payment each month and holds your escrow account for tax and insurance payments. A sub servicer is a company that performs this work on behalf of another company.

Once a mortgage loan closes, the borrower must make a monthly mortgage payment to the lender. Payments are made to a mortgage servicer or sub servicer. Some lenders  make mortgages but do not want to collect mortgage payments and other related work.  Accordingly, such banks hire a company called a sub servicer to perform these tasks on behalf of the bank.

Escrow Accounts

Mortgage sub servicers not only collect mortgage payments from borrowers, but they also hold the escrow accounts for paying taxes and insurance. The mortgage sub servicer is responsible for paying the borrowers' taxes and insurance from the mortgage escrow or impound account when due.

Delinquent Payments

Mortgage sub servicers are responsible for receiving monthly payments from borrowers but they are also responsible for contacting the borrower when the payment is not received. Known as collection, the mortgage sub servicer will contact the borrower as soon as a mortgage payment becomes delinquent. If necessary the sub servicer will send the borrower's house to foreclosure and perform all of the related tasks.

Rules about transferring mortgage servicing.

Sub servicers are regulated by the federal government and must provide certain disclosures to borrowers. If the borrower's servicing is transferred to another sub servicer the borrower must receive written a Notice of Transfer 15 days prior to such transfer.

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