How Do Mortgage Servicers Make Money?

Mortgage servicing companies generally receive a fee paid out from each loan that they service. The amount of the fee usually depends on the type of loan the company is servicing and the credit rating of the borrower. For example, a mortgage servicing company will charge lower fees if you have a high credit rating, while requiring higher fees in the event that your rating is lower. Low-credit rating borrowers must pay higher servicing fees because it is more likely that these borrowers will default on their loans and may eventually require foreclosure proceedings. If foreclosure occurs, the servicing company will be forced to manage more administrative issues.

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Mortgage servicers' fees have become increasingly expensive since the 2008 housing crisis, as companies have become more cautious about managing mortgage loans since that time.