What does the term 'loan servicer' refer to?

The term 'loan servicer' refers to the person or company that manages a loan after it has been closed. This role includes various responsibilities, such as collecting monthly payments from the borrower, applying those payments to the loan balance, managing escrow accounts for property taxes and insurance, and providing customer service regarding the loan. The loan servicer acts as the main point of contact for the borrower throughout the life of the loan, addressing issues related to payment processing and providing information about the loan status.

In this context, a loan servicer is distinct from the lender, who initially provides the funds for the loan. While the appraiser assesses the property’s value, and the buyer is the individual purchasing the property, it is the loan servicer who takes on the ongoing management of the loan to ensure that all terms are adhered to and payments are processed properly. Thus, the correct understanding of a loan servicer highlights their vital role post-closing, facilitating the smooth operation of the loan and maintaining the relationship with the borrower.