Loan Servicer Law and Legal Definition

A loan servicer is a financial institution which reports loan payment, collects the monthly payment and penalties on late payment, releases liens, makes certain that insurance and taxes are paid and initiates foreclosure proceedings for loans in default. A loan servicer is also called a mortgage servicer. Mortgage servicers receive fee income. The loan servicer can also be a lender, who owns the loan. Most often, the investors hire loan servicers to collect payments.