A Mortgage Sub Servicer

What is a Mortgage Sub-Servicer?

A mortgage sub servicer is a company that collects your mortgage payment each month and holds your escrow account for tax and insurance payments. Once a mortgage loan closes, the borrower must make a monthly mortgage payment to the bank or lender that loaned the borrower money. These payments are made to a mortgage servicer or sub-servicer.

Original Mortgage Lender

Many banks make mortgages but do not wish to be in the business of collecting mortgage payments and other related work. Accordingly, such banks hire a company called a sub-servicer to perform these tasks on behalf of the bank.

Mortgage sub-servicers not only collect mortgage payments from borrowers, but they also hold the escrow accounts for paying taxes and insurance. The mortgage sub-servicer is responsible for paying the borrowers' taxes and insurance in a timely manner.

Collection Agent

Mortgage sub-servicers are charged with receiving monthly payments from borrowers but they are also responsible for contacting the borrower when the payment is not received. Known as "collection" the mortgage sub servicer will contact the borrower as soon as a mortgage payment becomes delinquent. If necessary the sub-servicer will send the borrower's house to foreclosure and perform all of the related tasks.

Mortgage Servicing Disclosures

Mortgage sub servicers are regulated by the federal government and must provide certain disclosures to borrowers. If the borrower's servicing is transferred to another sub servicer the borrower must receive written a "Notice of Transfer" 15 days prior to such transfer.