You have signed stacks of documents, closed on your home, and are now officially a homeowner.
After partnering with a mortgage lender, you will now work with a mortgage servicer like RoundPoint. Mortgage servicers manage your loan and are responsible for important tasks including, but not limited to, collecting payments, sending statements and disclosures, and managing escrow accounts.
At RoundPoint, we understand homeownership is complex and may sometimes feel overwhelming. We pride ourselves on being a trusted and reliable servicing partner, so let’s take the mystery out of many servicing documents you may encounter throughout the life of your mortgage loan.
Common Mortgage Servicing Documents: Quick Review
Other Names: Welcome Letter, Goodbye Letter
Frequency: 15 days before the transfer date (goodbye letter), then 15 days after the transfer date (welcome letter)
Summary/Situation: When the mortgage loan is transferred from one mortgage servicer to another, a common practice in the mortgage industry
Other Names: Mortgage Statement
Frequency: Monthly
Summary/Situation: Breakdown of monthly transactions and fees
Other Names:
Frequency: Annually
Summary/Situation: For all loans with an associated escrow account, this statement summarizes the previous year’s activity and estimates any changes for the coming year
Other Names:
Frequency: Typically 210-240 days prior to first adjusted payment due date (initial/first adjustment) and 60-120 days prior to the first adjusted payment due date (subsequent adjustments), although a variety of adjustment frequencies are available based on the loan agreement.
Summary/Situation: For all adjustable-rate mortgage (ARM) loans, when interest rates are slated to change in accordance with the loan agreement
Other Names: Payoff Quote
Frequency: Upon request
Summary/Situation: Often requested during the processes of selling the home, refinancing the home, or transferring ownership
Other Names: Year End Statement, Form 1098, 1098, Form 1099, 1099
Frequency: Annually
Summary/Situation: Tax document provided when homeowners pay $600 or more in mortgage interest over the course of a year; often used for tax filing purposes
Other Names: Breach Letter
Frequency: Varies by state (typically 30-120 days after missed payment)
Summary/Situation: When the borrower fails to make the monthly mortgage payment for a specific duration
Other Names: Mortgage Assistance Application
Frequency: Upon request and by 45 days delinquency
Summary/Situation: When the borrower struggles to keep up with their monthly mortgage payment/faces a financial hardship
Continue reading to dive deeper into more document details!
Notice of Servicing Transfer (also known as Welcome and Goodbye Letters)
Notice of Servicing Transfer (also known as Welcome and Goodbye Letters)
A Notice of Servicing Transfer is sent to borrowers when the servicing of their mortgage loan is transferred from one company to another. If preferred, the prior servicer and new servicer can send one combined notice within the goodbye timeframe.
These notices are required by federal law and contain important information including, but not limited to:
- The transfer date
- Relevant servicer details for both the prior and new servicer including company names and contact details
Servicing transfers are an extremely common occurrence in the mortgage industry. Although a transfer should be a relatively seamless transition, it is important to carefully review these notices and ensure you understand the changes.
Billing Statement
Billing Statement
A billing statement, sometimes referred to as a mortgage statement, outlines pertinent mortgage loan details. Mortgage servicers often send borrowers a statement each billing cycle, meaning you should typically receive one monthly, by mail or electronically, based on your selected preference.
Billing statements often provide a great snapshot of your loan’s activity and status. They generally contain the following key loan information:
- Servicer contact information,
- Your account number,
- Payment due date,
- Recent transactions,
- Amount due breakdown for items like principal, interest, property taxes, and/or insurance,
- Delinquency details (if applicable).
Regular review of your billing statements may assist you in tracking your loan repayment progress and managing your monthly budget. Additionally, you may be able to quickly identify any errors or discrepancies to be addressed with your servicer.
Escrow Statement
Escrow Statement
A mortgage escrow statement provides an overview of your escrow account, which is commonly used to pay property taxes, private mortgage insurance (if applicable), and/or homeowners insurance. This statement will reflect the activity details during a certain period (typically a year). Although not all mortgage loans have an associated escrow account, many do! If you are unsure whether your mortgage loan includes an escrow account, review your billing statement or contact your servicer.
An escrow statement typically provides the following information:
- Standard account details like your account number and payment due date,
- Date of the escrow analysis,
- Projected escrow account details based on the anticipated disbursements and due dates for the coming year,
- Any shortage or surplus.
Paying close attention to any comparison and projection amounts will help you understand any anticipated changes. For example, if your property taxes have increased, you can expect this to be reflected in your monthly mortgage payment amount. The escrow statement will display your current monthly mortgage payment amount compared to the new amount.
Interest Rate Adjustment Notice: ARM Loans
Interest Rate Adjustment Notice: ARM Loans
Interest rate adjustment notices are sent to borrowers with adjustable-rate mortgage (ARM) loans. In compliance with Regulation Z of the Truth in Lending Act, mortgage lenders and servicers are required to notify borrowers about interest rate and payment changes during various stages of the loan’s lifecycle.
During the homebuying process, borrowers will receive an initial disclosure prior to the loan’s finalization outlining the loan’s terms, including interest rates and payment calculations. Additional notices will be received throughout the life of the loan per the loan terms:
- ARM loans with a fixed-rate period of more than one year: Servicers must provide a notice between 210 and 240 days prior to the first adjusted payment’s due date.
- Subsequent adjustments: A notice must be provided between 60 and 120 days prior to the first payment at the new rate’s due date.
- ARM loans that adjusts every 60 days or less: The notice can be provided between 25 and 120 days prior to the adjusted payment’s due date.
The notice will always include pertinent information related to the change including, but not limited to, the current and new interest rates, the date of the rate change, and an explanation of how the new rate was determined.
Payoff Statement
Payoff Statement
A mortgage payoff statement is provided by your mortgage servicer and specifies the exact total amount required to settle (or pay off) your mortgage loan as of a particular date. A payoff statement, also known as a payoff quote, includes the following key components:
- Good-through date: The date until which the listed amount is valid. Since interest continues to accrue, the amount may change after this date.
- Principal balance: The remaining principal amount still owed on the loan.
- Accrued interest: The accumulated interest amount up to the good-through date.
- Fees: Any additional charges as applicable (e.g., administrative fees).
Payoff statements are generally not proactively provided to borrowers; you must explicitly request one from your mortgage servicer as needed. Scenarios that may require you to request a payoff quote include, but are not limited to, selling your home, refinancing your home, or transferring ownership.
Mortgage Interest Statement
Mortgage Interest Statement
A mortgage interest statement is commonly referred to as Form 1098 or a 1098. This statement is a tax document homeowners receive when they pay $600 or more in mortgage interest over the course of a year. This form is used to report certain payments associated with your mortgage like mortgage interest and insurance premiums.
Borrowers can expect to receive these forms, if applicable, on an annual basis; they are generally distributed by the end of January each year. It is important to retain this document for your records, particularly as you file taxes annually, as some of these payments can potentially be used as deductions. If you have questions about your mortgage interest statement and any possible tax impacts, please consult a tax professional; your mortgage servicer cannot provide tax advice.
Pre-Foreclosure Notice/Notice of Default
Pre-Foreclosure Notice/Notice of Default
A pre-foreclosure notice is a formal notice and warning from your mortgage servicer that you are behind on your mortgage loan payments and, if payment is not made or the situation is not otherwise resolved, you may face foreclosure. Pre-foreclosure is the initial step toward foreclosure and generally occurs once a mortgage becomes 30-120 days past due.
After a missed mortgage payment, a notice of default may be sent, which advises legal action may commence if the issue is not resolved. Additional missed payments will trigger subsequent notices as the loan falls further behind.
If you miss one or more mortgage payments, it is important to remain in communication with your servicer, including reviewing and, as appropriate, responding to these notices. Typically, there may be a variety of assistance options to help you resolve the delinquency including, but not limited to payment plans, loan modifications, and short sales.
Loss Mitigation Application
Loss Mitigation Application
If you fall behind on your monthly mortgage payments, you can expect to receive paperwork regarding “loss mitigation” or “mortgage assistance” from your mortgage servicer. In this situation, you can also proactively reach out to your mortgage servicer to discuss possible options and request the appropriate paperwork. Loss mitigation allows homeowners and servicers to work together and discover possible alternative repayment options to avoid foreclosure. Some common loss mitigation options include:
For borrowers struggling with their mortgage payments, early and quick action is crucial. The sooner a borrower contacts their mortgage servicer, the more options that may have available to them (based on open communication and potential qualification). This is especially true when receiving loss mitigation-related paperwork – efficient and accurate completion and timely submission is imperative. The ultimate goal of loss mitigation is to identify a solution that benefits the borrower and the mortgage servicer!