Mortgage Loan Servicing Flashcards
knowledge on the often unseen and unthought of part of the mortgage lending process… mortgage loan servicing. You will learn exactly what this service entails, and you will be tested on how it serves the needs of the applicant and the lender.
After the closing of the mortgage loan, the applicant is now theproud owner of a loan. But this is not the end of the lender’s affairs
with their client as they continue to work together to pay off the secured loan. In this repayment agreement, what is a mortgage loan service?
A. A mortgage service that handles mortgage statements.
B. The mortgage lenders.
C. Banks.
D. Accountants.
Answer: A
A is correct, as mortgage loan servicing is provided by a mortgage servicer
independent of the mortgage lenders, banks, and accountants. They handle
the mortgage paperwork for borrowers and give mortgage statements. They
also handle escrow accounts as a neutral third party to protect funds and
mortgage agreements between lenders and borrowers.
Part of the cost of the mortgage will also include a fee to pay for the mortgage loan service. How much is a mortgage loan service for an applicant?
A. This service is free, and government funded.
B. Lenders cover the fees for borrowers.
C. Five percent of the mortgage.
D. 0.25-0.5% of a mortgage.
Answer: D
D is correct, as a mortgage loan servicer will charge an applicant 0.25-0.5%
of their total mortgage loan amount to service their statements and oversee
their escrow account. These costs will come from the mortgage repayments.
The lender’s relationship with their client doesn’t end until the client has repaid their loan in full. During this tenure, they will also work closely with a mortgage servicer. What is the difference between a
mortgage lender and a servicer?
A. Both have the same roles.
B. A lender handles the mortgage loan while the servicer does paperwork and accounts.
C. A lender and servicer are separate institutions working independently.
D. The servicer sides with the applicant and the lender are a separate party.
E. B & C.
Correct answer: E
E is correct, as a mortgage lender is the one that gives the applicant a home loan, while the mortgage servicer is an independent third party that handles the paperwork and attached escrow account. The servicer does not side with either party and does not have an impact on mortgage rates except their
service fees. This arrangement ensures a moderate third party that can hold money should issues arise.
Being the moderate third party in a mortgage agreement is an important job, so is there a mortgage-serving law in place?
A. No
B. Yes
Correct answer: B
Yes is correct, as there are several laws that help regulate the mortgage-serving profession. The Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act (Regulation X) is the most comprehensive legislation which outlines the practice, such as how to look after client
information and what not to do. They also follow the anti-discrimination Truth in Lending Act (Regulation Z) like all lending professionals. All of these laws are overseen by the Consumer Financial Protection Bureau, the ones who publish regular practice guideline updates and enforce the law.
In the Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act, what is Regulation X?
A. Servicers should respond quickly to error notices.
B. The correct processes that servicers must follow.
C. Servicers should acknowledge information requests promptly.
D. An outline of prohibited practices.
E. All the above
Correct answer: E
E is correct because Regulation X is all the above rulings for mortgage servicing that all professionals must comply with. This includes efficiently clearing and handling error notices or requests for information. They must also follow the correct processes and some prohibited practices as a handler
of mortgage loan escrow accounts and statements.
Who does a mortgage service pass on payments to?
A. The lender.
B. The applicant.
C. Both.
Correct answer: C
C is correct, as although the mortgage servicer passes payments primarily
from the applicant to the lender, sometimes an applicant will request a
mortgage payment off their repaid loan sum to pay to emergency funds. The
servicer also ensures that the initial mortgage loan passes from the lender to
the applicant.
Regulation X in the Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act guides professional mortgage servicers. What should a mortgage servicer NOT do as part of this law?
A. Respond to requests and errors promptly.
B. Ignore the latest developments in complex mortgage law.
C. Charge the applicant for their service.
D. Maintain neutral ground as the third party.
Correct answer: B
B is correct, as one of the essential things a mortgage professional should be aware of is the latest trends in the complex world of mortgage law. This is easily overcome by following the latest guidelines published by the CFPB and keeping up to date with news. This rule applies to every mortgage servicer and all working in every industry.
