Question:

What are the different mortgage lender services provided by companies in the US?

Answer:

Private companies in the US provide different kinds of services to mortgage lenders. The major ones are:

Foreclosure Management

The service provider oversees the whole foreclosure process, where a property is sold upon the failure of a borrower to meet debt requirements. This is an ugly side of the business and lenders prefer to have a foreclosure management firm do this job for them.

Foreclosures also involve certain legal procedures and foreclosure service providers identify, retain and coordinate the activities of dedicated attorneys. There are numerous advantages of using a foreclosure management company for a mortgage lender. Some of them are:

  • Centralized foreclosure database and services
  • Constant case status updates
  • Time line adherence
  • Cost efficiency

Loan Servicing

This is the service where instead of the mortgage lender; a servicing firm collects the monthly payment from borrowers. The service usually includes the preservation of the monthly payment schedule and the maintenance and servicing of escrow accounts and tax/insurance payments respectively. The level of service depends on the terms negotiated between the service firm and the mortgage lender.

Loan Origination

This is the process where a loan is created that is secured by, a part or whole, of the borrower's property. Mortgage origination involves the following tasks:

  • Legal paperwork
  • Marketing of the mortgage to consumers
  • Buyer qualification
  • Documentation
  • Mortgage placement on lender's accounts

Because of the nature of the talks, they are outsourced to specialized service providers.

REO Property Management

Real Estate Owned (REO) properties are those that are owned by a lender after a foreclosure. This means that REO properties are houses that have been repossessed by the lender due to inability to transfer ownership to a new, paying owner.

Since mortgage lending institutions like banks are not in the business of owning houses, but are stuck with them in any case, they are provided management services by REO property handling firms.

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