Is There Any Difference Between a Bank and a Non-Bank Mortgage Servicer?

Yes. Because regulations governing the mortgage servicing industry have nearly quadrupled the costs associated with handling delinquent loans, and considering that these regulations do not usually apply to non-bank servicers, non-banks' market share in the mortgage-servicing industry has grown at an incredibly high rate over the past decade. Moreover, as of last year, non-bank servicers had surpassed banks in the amount of serviced mortgages.

The main difference in this respect is that non-bank servicers are often not regulated by the relevant authorities. For you, as a borrower, the risk is that non-bank servicers will offer decreased transparency relative to banks. For example, since these companies are not given a certain minimum capital requirement, they could go bankrupt without much notice or they may otherwise lack sufficient funds to provide services.

Another important difference is that you, as a borrower, may only choose your mortgage lender, but not your mortgage servicer.