A loan servicer acts as a third party to a lender and collects and monitors various payments regarding loans, including taxes, and the mortgage itself. Loan servicers can be public or private entities. The main purpose of a loan servicer in real estate is to collect mortgage payments. A servicer can also hold payments in escrow, report details to a lender, and in some cases foreclose on a defaulted property if the borrower defaults on the terms of the loan. Loan servicers also handle and report property taxes and insurance payments. Since the main purpose of a servicer is to act on behalf of the lender in securing payments on a loan, they may charge late fees and retain the money in handing over the remaining payment when late. They can also remit, or cancel, the transaction of payments for various reasons and hold funds in escrow such as insurance.
