- Posted by Jeremy Bachmann
You comparison shopped, choosing your mortgage lender carefully. Then, shortly after closing, you receive a letter from a new company - maybe PennyMac - introducing themselves as your servicing provider. Should you take it personally?
Not at all. While many financial institutions, like PennyMac, both originate and service loans, they're really considered separate skills. The local credit union, for example, may not have the means to efficiently collect monthly payments, manage your escrow account, pay taxes and insurance, answer all your questions, and the other tasks a servicer performs. So, the owner of your loan pays the servicer to manage your loan. Your servicer can sometimes change multiple times over the life of the loan.
Where it can get confusing is that neither the company that did your loan nor the servicer may actually OWN your loan. Today, the majority of home loans are guaranteed or issued by Fannie Mae or Freddie Mac, government-chartered companies that purchase loans from lenders to free up money to lend to other mortgage borrowers. Your lender may originate your loan, sell it to Fannie Mae, then Fannie Mae has a third company service the loan. Typically, borrowers aren't aware of the Fannie Mae sale unless they're seeking certain loan refinance or modification options, such as those under the current Making Home Affordable program.