“Can I Control Who My Mortgage Servicer Will Be?”by Tim Manni
We recently stumbled across the question “can I control who my mortgage servicer will be?” “Jpg” posted this question on the financial information website SmartHippo.com. Here is the question:
I’ve heard anecdotal stories of people having problems with their mortgage servicer (escrowed taxes not paid due to computer errors, payments not recorded on time resulting in late fees, etc).
I was wondering, is there any way when closing my loan that I can control who the servicer will be? Or can the originator just sell my mortgage to anyone they choose?
If I can’t control who the service will be, do I have any recourse i.e. can I complain to Fannie Mae if I’m having problems or switch to a new servicer?
Our friend Bill Rice answered the question like this (see answer below original question):
Unfortunately, you don’t have a lot of control over your mortgage servicer. Generally mortgage lenders sell your mortgage into the secondary markets based on “best efforts (price).” Even more of a challenge is actually knowing who is a servicer or who is a good one.
Having said this, here are a couple of things that may increase your chances of influencing your servicer (all of these are “typical,” not absolute):
- Federally chartered banks hold the majority of their mortgage loans (e.g., genera rule of thumb–where your checking, savings, CDs, etc.)
- Large mortgage banks rarely service loans and often sell to a broader range of servicers
- Small independent mortgage brokers often originate your mortgage knowing specifically where it is going (servicer) and can tell you
As for recourse once you have a servicer…sorry you’re stuck. This question may explain why so few borrowers get their subsequent mortgage from the same place. So few customers actually understand the distinction between originator and servicer. As a result, most of the impact lands on the originator.
Since your loan can be bought or sold at any given time, there’s a strong possibility that your servicer will change at some point during the life of your loan. When filling out your mortgage application, make sure you read the ‘Servicing Disclosure Statement‘ which will notify you of the likeliness of whether or not the servicing of the loan will be transferred to another servicing company.
To learn more about what your mortgage servicer does for you (the borrower) and to find out how you can file a dispute against your servicer (if you encounter an issue like proposed in “jpg’s” question), be sure to read the Federal Trade Commission’s consumer fact sheet on mortgage servicing.