Mortgage servicing: What your loan servicer actually does

Q: What is the difference between a lender and a mortgage servicer?

The lender is the company that underwrote and funded your loan. The servicer is the company that manages it afterward: taking your payment, running your escrow account, sending statements, and handling hardship requests. They are often the same company at first, but servicing rights are frequently sold, which is why the name on your statement may change even though your loan terms do not.

Q: How do I find out who services my mortgage?

Check your monthly mortgage statement or your payment coupon book, which lists the servicer's name and contact information. You can also look up your loan on the Fannie Mae or Freddie Mac loan lookup tools if your mortgage is backed by either agency. If servicing was recently transferred, you should have received notices from both the old and new servicer.

Q: Can I choose or change my mortgage servicer?

Generally no. Servicing rights belong to the loan owner, and they are sold between companies without your consent. You cannot switch servicers on an existing loan, though refinancing gives you a new loan and potentially a new servicer. If your servicer is mishandling your account, you can file a notice of error or a complaint with the CFPB.

Written by Samantha SheltonNMLS 1647301Updated October 2026

Homeowner at her kitchen table reviewing mail and calling about mortgage servicing questions on her loan account

Mortgage servicing is the day-to-day administration of your loan after closing: collecting your payment, managing your escrow account, paying your property taxes and homeowners insurance, and working out options if you fall behind. Federal rules make your servicer reanalyze your escrow account at least once every computation year, and if your servicing is ever sold, notify you at least 15 days before the transfer takes effect.

Your servicer may be the lender that originated your loan or a separate company that bought the servicing rights. Either way the sale doesn’t touch your rate, balance or payoff date, the transfer notice has to say so in writing, and for 60 days afterward, a payment you sent to the old servicer on time can’t be treated as late.

Learn what mortgage servicing covers, who the players are, what happens when your loan transfers, and what your servicer owes you when money gets tight. Earlier in the process? Start with our Mortgage Basics guide.

Key takeaways:

Servicing is your loan’s entire afterlife: One company handles payments, escrow, insurance and hardship options, and owes you a statement every billing cycle plus an escrow statement within 30 days of the end of each computation year.
A transfer changes the letterhead, not the loan: Notice comes at least 15 days before the effective date and within 15 days after, and for 60 days afterward an on-time payment to the old servicer can’t draw a late fee.
Call before you miss a payment, not after: Your servicer must attempt live contact by day 36 of delinquency and send written notice by day 45, and on covered loans can’t make a first foreclosure filing until the loan is more than 120 days delinquent.

What is mortgage servicing?

Mortgage servicing is the ongoing administration of a mortgage after it closes: receiving the scheduled payments, holding and disbursing escrow funds for taxes and insurance, and passing principal and interest along to whoever owns the loan. That is close to the federal definition itself.

A servicer is the party responsible for that work including the lender, when the lender keeps the file. Originating and servicing are different businesses, which is why the company that walked you to the closing table isn’t necessarily the one collecting from you for 30 years. Payment posting, escrow, statements, payoff quotes and hardship options all live with the servicer, including one duty worth naming now: an accurate payoff statement within seven business days of a written request.

All of it sits downstream of origination. For how the file gets built, see the Mortgage Loan Process; our Payments, Escrow & Servicing hub collects the rest of the post-closing topics.

Who are the key players in mortgage servicing?

Four parties touch your loan after closing. Only one answers your phone.

Party	What they do	When you deal with them
Your servicer	Collects payments, runs escrow, sends statements, issues payoff quotes, handles hardship requests.	Every month, and whenever you have a question.
The loan owner or investor	Holds the note and sets the menu of loss mitigation options the servicer may offer.	Almost never directly. Request their identity in writing; you get an answer within 10 business days.
The insurer or guarantor	Backs the loan against default, FHA on an FHA-insured loan, a private insurer on a conventional loan under 20% down.	Indirectly, through the premium inside your payment.
You, the homeowner	Make the payment, keep hazard insurance in force, put errors in writing.	Constantly. You’re the only one watching all of it.

Your broker is a fifth, temporary party: Align Lending places your loan, but who services it afterward is the loan owner’s decision, see the benefits of servicing with Align Lending.

What does your mortgage servicer do every month?

Payment processing

Your servicer must credit a periodic payment (principal, interest and escrow together) as of the date it’s received, not the date it gets keyed in. Send less than a full one and it may sit in suspense until enough accumulates. Late fees can’t be pyramided either: none charged solely because you didn’t pay an earlier late fee.

Escrow account management

An escrow account is money your servicer holds from each payment to cover property taxes and homeowners insurance, then pays those bills before a penalty deadline. The CFPB’s overview of how escrow accounts are managed by servicers is worth five minutes if it’s new to you.

The math is bounded by rule. Say a Waterford home carries $4,800 a year in property taxes and $1,200 in insurance, $6,000 of annual disbursements, about $500 a month. Beyond what’s needed to pay those bills on time, your servicer may hold a cushion of no more than one-sixth of the annual total: $1,000 here, roughly two months.¹ Then it gets trued up:

The initial statement: Delivered at settlement or within 45 calendar days of it.
The annual analysis: At the completion of each escrow computation year, the servicer reanalyzes the account and delivers an annual escrow account statement within 30 days.
Surplus and shortage: A surplus of $50 or more must be refunded within 30 days of the analysis; a shortage may generally be repaid in installments over at least 12 months.

That’s why your payment can change on a fixed-rate loan: the rate never moved, but your tax bill did. Our deep dives on mortgage escrow accounts and what escrow is and how it works read an analysis line by line. Your servicer also files IRS Form 1098 and sends you a copy when it takes in $600 or more of mortgage interest from you.²

Insurance oversight and PMI removal

Servicers track whether your hazard insurance is in force, because the collateral is uninsured the moment it lapses. If yours lapses the servicer can buy a policy and bill you, but only on a clock: written notice at least 45 days before the charge, then a reminder no sooner than 30 days after the first and at least 15 days before it. Send proof of coverage inside that window and the charge doesn’t happen.

Your servicer also cancels PMI on a conventional loan, and the Homeowners Protection Act creates three distinct paths that each require you to be current. You may request cancellation on the date the balance is scheduled to fall to 80% of original value in writing, with a good payment history, a certification of no junior liens, and evidence the value holds if asked. Your servicer must automatically terminate PMI, no request needed, at 78% of original value. If neither happens, PMI ends the month after the midpoint of your amortization schedule. All three measure against original value, not today’s market value; see mortgage insurance.

What happens when your mortgage servicing is transferred?

Servicing rights get bought and sold constantly, and a transfer is an administrative event, not a change to your loan. The federal notice must state that it does not affect any term or condition of the mortgage loan other than terms directly related to servicing. Three numbers define the handoff:

15 days before: Your old servicer must give notice not less than 15 days before the effective date.
15 days after: Your new servicer must give notice not more than 15 days after it. Both carry the effective date and a collect-call or toll-free number.
60 days of protection: During the 60 days beginning on the effective date, a payment the old servicer receives on or before its due date may not be treated as late for any purpose.

When the letters arrive, confirm the two effective dates match and keep proof of anything you send. The 60-day rule protects you, but you’ll need the record to invoke it.

What happens if you fall behind on your mortgage?

Your servicer must reach out before you do. It has to establish or make good-faith efforts to establish live contact with a delinquent borrower no later than the 36th day of delinquency, and deliver a written early intervention notice no later than the 45th. A notice naming loss mitigation options that may be available and where to find homeownership counseling.

Once you ask for help, the timeline tightens. Your servicer must acknowledge a loss mitigation application in writing within five business days and say whether it’s complete. File a complete one more than 37 days before a scheduled foreclosure sale and it has 30 days to evaluate you for every option available on your loan, and it can’t move for a judgment or order of sale, or conduct the sale, while that evaluation is pending. The usual options, in rough escalation order:

Repayment plan: Your regular payment plus a slice of the past-due amount until you’re current.
Forbearance: Payments pause or shrink temporarily. This is the one people misread. The CFPB is explicit that forbearance does not erase or decrease the amount you owe. You pay the difference back later, so get the exit terms in writing at the start. See the CFPB’s explanation of forbearance.
Deferral: On some loan types the missed amount moves to the back of the loan, due at payoff, sale or refinance.
Loan modification: A permanent change to rate, term or balance to make the payment sustainable.
Short sale or deed-in-lieu: Exits when keeping the home isn’t realistic.

FHA-insured loans layer HUD’s servicing requirements on top of these rules; HUD’s Single Family Servicing operation works with FHA homeowners and their lenders to avoid foreclosure, including tools such as the partial claim.³ Our walkthrough of mortgage forbearance covers the exit paths.

One backstop worth memorizing: on covered loans a servicer generally can’t make the first notice or filing for foreclosure unless the loan is more than 120 days delinquent. That’s runway, not a grace period. And don’t pay anyone for help. As the CFPB puts it, the help you need is free from your servicer or a HUD-approved housing counseling agency.

What rules do mortgage servicers have to follow?

Two rulebooks, both administered by the Consumer Financial Protection Bureau. Regulation X, at 12 CFR Part 1024, implements RESPA and governs escrow accounts, transfer notices, early intervention and loss mitigation. Regulation Z, at 12 CFR Part 1026, implements the Truth in Lending Act and covers payment crediting, periodic statements and payoff quotes. Both belong to the CFPB, not HUD, which people still assume because RESPA started there. Read the federal mortgage servicing regulations at the source.

Two tools in those rules start clocks a phone call does not:

Notice of error: A written assertion that your servicer got something wrong. Acknowledged within five business days, answered within seven business days on a payoff-balance error and 30 business days for most others.
Request for information: A written request for account information, same five-day acknowledgment. The loan owner’s identity is due within 10 business days; most other requests within 30.

What Michigan homeowners should know

Michigan’s property tax calendar is what makes escrow here feel different from a single-bill state. Most Michigan communities bill property taxes twice a year, a summer installment and a winter installment, collected by your city or township treasurer, with due dates set locally. That changes your escrow account’s rhythm, not the rules governing it.

Two disbursements, one cushion cap: Your servicer writes two tax checks a year instead of one, but the cushion is still capped at one-sixth of annual escrow disbursements about two months’ worth.
Your analysis follows the tax calendar: The computation year is a 12-month cycle and the annual statement is due within 30 days of its completion, so a summer bill larger than projected gets corrected there, not immediately.
Surpluses and shortages both have rules: A surplus of $50 or more must be refunded within 30 days of the analysis, and a shortage can generally be spread over at least 12 monthly payments. If your servicer demands a lump sum, ask for installments in writing.

New construction and recently sold Michigan homes drift the most: the first full assessment can land well above the projection that funded your closing. That gap is a shortage, not an error. Our breakdown of mortgage escrow accounts shows how to read the worksheet.

How Align sets up your payment

Align places your loan with a wholesale lender, and that lender or its servicer collects your payments after closing. Before then, Samantha builds your escrow on your real tax bill, not the seller's.

The year after a Michigan home sells, its taxable value resets to half of the assessor's market value, so the seller's tax bill is not your tax bill. She quotes your number on the high side on purpose.

Get a homebuying budget review

Sources: Michigan Treasury, transfer of ownership and uncapping.

FAQ: Mortgage servicing

Here are answers to common questions about mortgage servicing.

What is the difference between a lender and a mortgage servicer?

The lender underwrote and funded your loan. The servicer manages it afterward: taking your payment, running escrow, sending statements, handling hardship requests. They’re often the same company at first, but servicing rights are frequently sold, which is why the name on your statement can change while your loan terms do not. See how the roles split in the mortgage loan process.

How do I find out who services my mortgage?

Check your monthly statement or payment coupon, which lists the servicer’s name and contact information. If servicing transferred recently, you should have notices from both servicers showing the effective date. To learn who owns the loan, send a written request for information; your servicer must respond within 10 business days. Our payments, escrow and servicing hub explains the notices.

What should I do if I can’t make my mortgage payment?

Contact your servicer before you miss a payment, not after. Submit a loss mitigation application and it must be acknowledged within five business days and, if complete and filed more than 37 days before a foreclosure sale, evaluated within 30 days for the options on your loan. Document every call, and know foreclosure-avoidance help is free. Start with mortgage forbearance.

Can I choose or change my mortgage servicer?

Generally no. Servicing rights belong to the loan’s owner and are sold without your consent, so you can’t switch servicers on an existing loan. Refinancing gives you a new loan and possibly a new servicer. If your servicer is mishandling the account, send a notice of error in writing. Our look at servicing with Align Lending explains what changes.

The bottom line on mortgage servicing

Mortgage servicing is everything that happens to your loan after closing: payments, escrow, insurance, tax reporting, PMI removal and hardship options. Your servicer reanalyzes escrow each computation year, refunds a surplus of $50 or more within 30 days, and holds a cushion no larger than one-sixth of annual disbursements. A transfer brings 15 days’ notice before and 60 days of late-fee protection after, and changes no loan term. Fall behind and you should expect live contact by day 36, written notice by day 45, and no first foreclosure filing until the loan is more than 120 days delinquent.

If you’re ready to find out whether your current loan is still the right one, talk to Align Lending. We’ll shop your scenario across our lender network and put the payment and escrow numbers in front of you side by side. Call 248-506-5727 or start online today.

Footnotes:

1. Example figures in this article are hypothetical and for educational purposes only; they do not constitute an advertisement of credit terms or a rate quote under federal or state lending laws. Your escrow payment, cushion and analysis results depend on your property’s actual tax and insurance bills, your loan program, and your servicer’s computation year. Return to text.

2. This is general information, not tax advice. Whether mortgage interest or property taxes benefit you depends on your individual circumstances and on whether you itemize. Consult a qualified tax professional about your situation. Return to text.

3. Align Lending is not acting on behalf of or at the direction of FHA or HUD. FHA servicing and loss mitigation requirements are set by HUD and are subject to change; availability of any option depends on your loan and your servicer. Return to text.

Sources: definitions of “servicing” and “servicer,” 12 CFR § 1024.2(b). Servicing transfer notices not less than 15 days before and not more than 15 days after the effective date, required notice contents including the statement that transfer does not affect any term or condition of the loan, and the 60-day period during which a payment received by the transferor on or before the due date may not be treated as late, 12 CFR § 1024.33. Escrow cushion of no more than one-sixth of estimated total annual disbursements, annual escrow account analysis, surplus of $50 or more refunded within 30 days, shortage repayable over at least 12 months, initial escrow account statement at settlement or within 45 calendar days, and annual escrow account statement within 30 days of the end of the computation year, 12 CFR § 1024.17. Timely escrow disbursements and return of the escrow balance within 20 business days of payoff, 12 CFR § 1024.34. Notice of error acknowledgment within 5 business days and response within 7 or 30 business days, 12 CFR § 1024.35. Request for information acknowledgment within 5 business days, owner or assignee identity within 10 business days, other requests within 30 business days, 12 CFR § 1024.36. Force-placed insurance notice at least 45 days before assessing a charge, with a reminder no earlier than 30 days after the first notice and at least 15 days before the charge, 12 CFR § 1024.37. Live contact no later than the 36th day of delinquency and written early intervention notice no later than the 45th day, 12 CFR § 1024.39. Acknowledgment of a loss mitigation application within 5 business days, evaluation of a complete application within 30 days when received more than 37 days before a foreclosure sale, the prohibition on moving for judgment or conducting a sale while that evaluation is pending, and no first notice or filing for foreclosure until the loan is more than 120 days delinquent, 12 CFR § 1024.41. Crediting periodic payments as of the date of receipt, the prohibition on pyramiding late fees, and payoff statements within seven business days of a written request, 12 CFR § 1026.36(c). Periodic statements for each billing cycle, 12 CFR § 1026.41. Forbearance does not erase or decrease the amount owed; mortgage relief options including refinance, loan modification, repayment plan, forbearance, short sale and deed-in-lieu; and foreclosure-avoidance help available at no cost from your servicer or a HUD-approved housing counseling agency, Consumer Financial Protection Bureau. PMI cancellation on borrower request at 80% of original value, automatic termination at 78% of original value, and final termination the month after the midpoint of the amortization schedule, each requiring the borrower to be current, Homeowners Protection Act as explained by the Consumer Financial Protection Bureau. Form 1098 filing for $600 or more of mortgage interest received from an individual in the course of a trade or business, IRS Instructions for Form 1098. HUD Single Family Servicing works with FHA homeowners and their lenders to avoid foreclosure and administers the partial claim, U.S. Department of Housing and Urban Development.

This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Servicing rules, escrow calculations, program options and property tax practices change and vary by loan program, servicer and Michigan community; confirm your figures with your servicer’s escrow analysis and statements and consult a qualified professional about your situation. Figures shown are illustrative, are not a rate quote or an offer of credit, and are subject to change. Align Lending is an independent Michigan mortgage broker, NMLS #2041154.