Borrowers often get confused about the difference between their loan’s “Servicer” and their loan’s “Owner”.
After a mortgage bank funds and records a loan, they sell the loan either to other “investors” (big banks, insurance companies, pension funds, etc.) or to Fannie Mae/Freddie Mac. In many cases, however, mortgage banks sell the “Servicing” separately from the loan.
Who Actually Owns Your Loan?
Companies will pay for the right to service a loan because they can collect a small monthly fee for doing so. These companies do not own the loan. They merely collect payments from borrowers, interact with borrowers, and make sure funds are disbursed properly to the mortgage holder. They also make sure the loan is amortized properly.
Servicer vs. Owner: Where Do You Send Payments?
Borrowers will often get letters from Servicers, asking them to start sending their payments to “ABC Servicing Company,” for example. Borrowers will also often get letters later on telling them that their loan is now owned by Fannie Mae or “DEF Investor,” and this confuses our borrowers to no end because they are not sure WHERE to send their payments. (Borrowers, of course, do not want to risk missing a mortgage payment and/or losing an entire payment by sending it to the wrong locale).
If there is ever confusion, the key is to contact to the most recent Servicer (the most recent recipient of your payment) to clarify the situation. The entity’s contact info can be found on the most recent mortgage statement.
