Mortgage Servicing (Overview)

Question 1

What are the primary requirements for record-keeping in mortgage servicing?

Answer 1

Document retention and a servicing file.

Question 2

What is document retention in mortgage servicing?

Answer 2

Keeping records of actions on a loan until one year after discharge or transfer.

Question 3

What must be included in a servicing file?

Answer 3

Transaction schedule, lien security document, borrower communication notes, data fields, consumer-provided info.

Question 4

What is an FHA loan?

Answer 4

A loan insured by the Federal Housing Administration allowing up to 96.5% borrowing.

Question 5

What is a USDA home loan?

Answer 5

A mortgage loan for rural property owners provided by USDA.

Question 6

What is a VA-guaranteed home loan?

Answer 6

A loan for veterans with no down payment, flexible interest rates.

Question 7

What is a fixed-rate loan?

Answer 7

A loan with an interest rate that remains fixed for 15 or 30 years.

Question 8

What is an adjustable-rate mortgage (ARM)?

Answer 8

A mortgage with variable interest rates that may start with a fixed period.

Question 9

What is a reverse mortgage?

Answer 9

A financial agreement where a homeowner receives payments by relinquishing home equity.

Question 10

What is a shared appreciation mortgage (SAM)?

Answer 10

A mortgage where lender receives a share of property value increase as payment.

Question 11

What is a suspense account?

Answer 11

A temporary account for payments before final allocation.

Question 12

What is an electronic funds transfer (EFT)?

Answer 12

Money transfer from one account to another without paper.

Question 13

What is a non-conforming payment?

Answer 13

A non-conforming payment is a loan payment that does not meet the lender’s specified requirements, such as incorrect amounts, missing account details, or failure to follow designated payment methods.

Question 14

What is a partial payment?

Answer 14

A payment not enough to cover principal, interest, and escrow.

Question 15

What is a payoff statement?

Answer 15

A statement of loan payoff amount, usually provided within seven days.

Question 16

What is prompt crediting?

Answer 16

Crediting a payment on the day of receipt for closed-end loans.

Question 17

What is a periodic payment?

Answer 17

Payment covering principal, interest, and escrow for a billing cycle.

Question 18

Who qualifies as a small servicer?

Answer 18

Those servicing 5,000 or fewer loans, nonprofit servicers, or Housing Finance Agencies.

Question 19

What exemptions do small servicers have?

Answer 19

Exemptions from periodic statements, force-placed insurance prohibitions, certain servicing rules.

Question 20

How long does a small servicer have to comply if they lose their exemption?

Answer 20

Six months or until the next January 1, whichever is later.

Question 21

What does ARM stand for?

Answer 21

adjustable-rate mortgage

Question 22

What does SAM stand for?

Answer 22

shared appreciation mortgage

Question 23

What does EFT stand for?

Answer 23

electronic funds transfer

Question 24

What is an early intervention requirement?

Answer 24

Requirement for servicers to contact delinquent borrowers early to discuss options to avoid foreclosure.

Question 25

What are continuity of contact provisions?

Answer 25

Rules requiring consistent point of contact for delinquent borrowers.

Question 26

When must a servicer start following regular servicing rules if they lose the small servicer exemption?

Answer 26

Within six months or by the next January 1.

Question 27

What are force-placed insurance provisions?

Answer 27

Rules governing when servicers can place insurance if the borrower fails to maintain coverage.

Question 28

What is a servicing file?

Answer 28

A collection of documents and records related to the management of a loan, including payment history, correspondence, and other servicing activities.

Question 29

What is Final Allocation

Answer 29

The process of assigning or distributing funds to their designated accounts or purposes, ensuring all transactions are accurately completed and reconciled at the end of a financial process.