What is meant by 'loan servicing'?

Loan servicing refers to the ongoing management of a mortgage loan after it has been funded. This includes various administrative tasks that ensure the loan remains in good standing and that borrowers fulfill their obligations. Loan servicing encompasses functions such as collecting monthly payments, maintaining accurate records, managing escrow accounts for property taxes and insurance, handling communication with borrowers, and addressing any issues that may arise during the life of the loan.

By focusing on the management aspect, loan servicing plays a critical role in maintaining the health of the mortgage portfolio for lenders, ensuring that they receive timely payments, and providing support to borrowers throughout the lifecycle of their loans. This understanding is essential for Mortgage Loan Originators, as they need to know the full scope of services offered to their clients even after a loan is approved and funded.