Servicing Fee


DEFINITION of 'Servicing Fee'

A percentage of each mortgage payment made by a borrower to a mortgage servicer as compensation for keeping a record of payments, collecting and making escrow payments, passing principal and interest payments along to the note holder, etc. Servicing fees generally range from 0.25-0.5% of the remaining principal balance of the mortgage each month.

BREAKING DOWN 'Servicing Fee'

In addition to earning the actual servicing fee, in most cases, mortgage servicers also benefit from being able to invest and earn interest on a borrower's escrow payments as they are collected until they are paid out to taxing authorities, insurance companies, etc. Mortgage servicing rights (MSR) trade in the secondary market much like mortgage-backed securities.

  1. Utilization Fee

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  2. Loan Servicing

    The administration aspect of a loan from the time the proceeds ...
  3. Mortgage Servicing Rights - MSR

    A contractual agreement where the right, or rights, to service ...
  4. Mortgage Excess Servicing

    The percentage of the monthly cash flow that remains after the ...
  5. Guarantee Fees

    Fees charged by mortgage-backed securities (MBS) providers, such ...
  6. Mortgage-Backed Security (MBS)

    A type of asset-backed security that is secured by a mortgage ...
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