Mortgage Servicing Companies
To find out how mortgage servicing companies work it would first be best to understand how mortgage servicing actually works.
Mortgage servicing is basically the term used for a company (sometimes the lender but this is rare) that services your mortgage – This job includes maintenance of accurate balances and records, collecting payments from the borrower and sometimes even paying taxes and insurance.
Mortgage servicing companies also go after borrowers who default on their mortgage and attempt to reposses their home.
It is quite safe to assume that most borrowers are extremely unsatisfied with the service element of their loan – In fact, recent research shows that up to 90% of people are unhappy with their mortgage servicing company! A massive number.
So Why Do Mortgage Servicing Companies Perform so Poorly?
Good customer service is expected as a given in this day and age this obviously helps with repeat business but strangely, this incentive for service companies isn’t there.
The reason for this is that the mortgage servicing companies are often in the shadows and the borrower doesn’t know who is servicing their loan! They only know who their lender or broker is. So even if they receive a bad service, they may leave but what is to say that their next mortgage will not have a poor performing service company behind it.
You see, the problem is that even the lenders don’t really care about the servicing aspect of the mortgage loan. They’ve closed the deal and therefore they have a customer so it is unimportant for them to worry too much about servicing.
It has no effect on the servicers finances whether they provide you with a good service or a bad service which is why quality is so low and why the figure of unhappy mortgage borrowers is so high when it comes to the servicing of their mortgage loan!
Wait, it gets worse..As the borrower, you can not get rid of your servicing company. The service provider is determined by your loan lender. The only way to be rid of poor mortgage servicing companies is to refinance with another loan lender.
However, you only have a chance of 10% of finding a service that you’re happy with so you need to consider whether it is even worth the risk and hassle if this is the only reason you’re unhappy about your mortgage!
For now, all that the consumer can really do is hope and pray that these mortgage servicing companies will pull their finger out to provide a good, as their name suggests, “service”. In this world where money talks, though, should we really putting all of our eggs in this very fragile basket?
I’d suggest, more realistically, learning to deal with their misgivings until someone does the right thing and sorts these servicing companies out from top to bottom.
