TeachMeFinance.com - explain mortgage servicing
mortgage servicing -- the activity of keeping a mortgage loan current, including collecting monthly mortgage payments, forwarding principal and interest payments to the current mortgage holder (if the loan has been sold), maintaining escrow accounts, paying taxes and insurance premiums, and taking steps to collect overdue payments. Mortgage servicing may be performed by the original lender, or the lender may sell the right to service a mortgage to another company, which performs the service for a fee. Some companies, including some savings associations, specialize in servicing mortgages, both their own and those made by other lenders. The original lender may sell the mortgage servicing rights to one company and sell the mortgage itself to another company. See mortgage servicing rights. See recourse servicing. See purchased mortgage servicing rights.
mortgage servicing rights -- the right to service a mortgage. See mortgage servicing.
recourse servicing -- mortgage servicing in which the company servicing a mortgage has assumed the financial risk in the event the borrower defaults on the loan. See mortgage servicing.
purchased mortgage servicing rights (PMSR) -- the right, acquired from another, to service a mortgage and collect a fee. The value of that right is listed on the books as an intangible asset. See mortgage servicing.
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