A:

A mortgage lender loans money for a home to borrowers. A mortgage servicer handles the daily functions of mortgages. A mortgage lender can also be a loan servicer. Lenders and servicers both have policies and procedures that companies are required to follow, and both are regulated by the federal government.

For people considering purchasing a home, there are several issues that have to be considered. One of the biggest considerations is finding a lender that will approve a loan. Depending on the borrower's financial situation, attaining a mortgage could be a relatively simple process or a test of endurance. When a person applies for a loan, he does this through a company that can offer money in exchange for a mortgage. This company is known as the mortgage lender. If the loan is approved, then the lender gives the money to purchase the home to the borrower, who then uses the funds to buy the house. The borrower then owes the lender for the amount borrowed to buy the home, plus interest.

Once the loan is created, it has to be processed. Processing includes making sure the loan is awarded to the borrower and that the borrower applies the loan to the intended purchase. Processing also includes tracking loan payments, ensuring reminder notices are sent in the event payments are missed and filing foreclosure documents in the event too many payments are missed. These activities are completed by mortgage servicers.

A mortgage lender and a mortgage servicer both help people attain mortgages for homes. In some cases, a mortgage servicer takes over where a mortgage lender stops. But mortgage lenders can also be mortgage servicers. If the lender is set up to handle deposits, such as a bank or financing company, the company can also service the loan. For lenders who cannot process deposits, that is when a servicer would be used. According to Quicken Loans, the use of lenders or servicers can also vary by state, depending on the laws of the state.

Simply put, the company that receives the loan payments is the mortgage servicer. Many local lenders also serve as the processor since a small lender, such as a local bank or credit union, might not have a large number of loans on its books. However knowing who is servicing the loan might be more difficult if a larger lender is used since these lenders tend to sell mortgages to other companies. In those cases, there are several ways to determine the servicer of a mortgage. According to the Consumer Financial Protection Bureau, the servicer for a loan is listed on the payment coupons or the top of the payment statement. Visiting the MERS® Servicer Identification System website can also provide this information.

RELATED FAQS
  1. What is the key to finding your ideal mortgage?

    Learn what steps you need to take in order to locate the perfect mortgage for your budget, lifestyle and long-term financial ... Read Answer >>
  2. What is the 1003 mortgage application form?

    Learn about the 1003 mortgage application form, what information it requires and why this form is the industry standard for ... Read Answer >>
  3. If My Mortgage Lender Goes Bankrupt, Do I Still Have to Pay My Mortgage?

    Yes, if your mortgage lender goes bankrupt you do still need to pay your mortgage obligation. Here's what usually happens ... Read Answer >>
Related Articles
  1. Personal Finance

    How Do Mortgage Lenders Get Paid and Make Money?

    When homebuyers educate themselves on how mortgage lenders get paid and make money, they are more likely to save thousands of dollars on their mortgages.
  2. Personal Finance

    Tips for Choosing the Best Online Mortgage Lender

    Finding the right online mortgage lender can be a tall task. Here's some help on how to avoid wasting your time.
  3. Personal Finance

    Mortgage Company

    A company engaged in the business of originating and/or funding mortgages for residential or commercial property.
  4. Personal Finance

    How to Find the Best Refinance Companies

    From traditional lenders to online loans, here's everything you need to know about refinancing your mortgage.
  5. Investing

    Financing Basics For First-time Homebuyers

    If you're looking to get your first mortgage, there are many financing options available.
  6. Personal Finance

    How to Pick the Right Lender When Refinancing a Mortgage

    Refinancing your mortgage has never been easier with the range of lenders and access to information that are available to you.
  7. Personal Finance

    Mortgage Broker vs. Direct Lenders: Which Is Best?

    There are key differences between mortgage brokers and direct lenders. Here's how to choose which is best for you.
  8. Personal Finance

    Finding the Best Mortgage Rates in 2017

    As home-buying technology has progressed, the process of finding the best mortgages rates can all be done online. Here's how:
  9. Investing

    Who is Ruling the Jumbo Mortgage Market?

    The jumbo mortgage market appears to be booming this year, despite the few economic hurdles everyone's battling. Here's who is ruling the industry.
RELATED TERMS
  1. No-Cost Mortgage

    A mortgage refinancing situation in which the lender pays the ...
  2. Qualified Mortgage

    A mortgage in which the lender has analyzed the borrower's ability ...
  3. Mortgage Broker

    An intermediary who brings mortgage borrowers and mortgage lenders ...
  4. Mortgage Rate

    The rate of interest charged on a mortgage. Mortgage rates are ...
  5. Home Mortgage

    A home mortgage is a loan given by a bank, mortgage company or ...
  6. Wraparound Mortgage

    A type of loan that enables a borrower who is paying off an existing ...
Trading Center