Trying to manage your own private mortgage could be a daunting task, especially if you have more than one. Administering a mortgage loan is the servicing required after the loan agreement or mortgage commitment has been executed. The lawyers and administrators at Levy Zavet can also facilitate the mortgage underwriting and loan before it closes.
Levy Zavet often acts as a loan administrator to its mortgage lenders as clients. Typically our mortgage lender clients outsource their loan administration once the loan closes (which we handle as well). Borrowers will also receive a letter that explains that we will be administering the mortgage loan on behalf of the lender.
Mortgage lenders should be busy evaluating potential borrowers’ creditworthiness, the equity left on the collateral property and issuing loans. Rather than creating a separate department to service your loans, its often best to outsource this function to Levy Zavet that specialize’s in mortgage closings, mortgage administration and mortgage enforcement.
Servicing a mortgage after it closes requires the following:
- Informing the borrower of their interest only payments, or repayment schedule, often called an amortization schedule for blended payments of interest and principle.
- Collecting the contact information of the borrowers and guarantors and any next of kin to use in the case of an absent borrower. Also, informing the borrower of any changes such as an assignment of the mortgage loan to a different lender or lenders, and if any changes in how to make the periodic payments are required.
- Depositing the periodic post-dated cheques of the mortgage repayments or interest only payments, on time when they come due. Or alternatively withdrawing the periodic mortgage payments directly from the borrower’s bank account or other form of payment.
- Ensuring the mortgage payments clear, and if not, to immediately record the date and reason for the payment being returned as not being able to clear, for example insufficient funds from the bank.
- To forthwith send a demand for payment to the borrower for the mortgage payment that was returned, informing them that they are in breach of the terms of the mortgage agreement, and that it is a form of default under the loan. In this letter any penalties, NSF fees, and compounded interest due because of this missed payment is calculated and the borrower is told to bring in certified funds prior to any enforcement proceedings.
- Collecting and depositing or withdrawing the missed payment from the borrower’s account, failing which a legal demand letter is sent out pursuant to the regulations and laws governing the mortgage enforcement proceedings in the jurisdiction where the collateral real estate property is located. This will also take into consideration any terms in the mortgage agreement.
- Communicating and reporting to the mortgage lender, and if more than one, ensuring that the terms of the any inter-lender or co-lender agreements are upheld.
- Remitting the cleared mortgage payments from the borrowers to the lenders in a timely manner. Along with a breakdown of the remittance and an accounting of the payments to-date as it compares to the payment schedule pursuant to the mortgage agreement with the borrower.
- Assisting co-lenders on the mortgage with assigning their interest or portion of the mortgage loan to a new mortgage lender or to one of the existing mortgage lenders on the same mortgage loan.
- Preparing any assignment agreements and transfer documents of the mortgage loan and security from the existing mortgage lender to the new mortgage lender, and completing any registrations to perfect same.
- Responding to any requests by the borrower or their lawyer for payment history information, delaying or moving the date of an upcoming mortgage payment, correcting any errors or miscommunications, preparing mortgage information statements and accounting of the payments made pursuant to its schedule, and preparing mortgage payout statements for discharge purposes including any prepayment penalty calculations.
- Handling any responses to other mortgage lenders and encumbrancers, such as construction lien claimants that have also secured or registered their interests in the same real estate property secured.
- Enforcing any mortgage loans that are in default, including power of sale and foreclosure proceedings, as well as suing the borrowers and guarantors for any shortfalls after recovery against the collateral real estate property.
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