Exactly what is a “servicer”?

There are two answers: First there is what everyone reasonably believes to be a servicer and then there is a the statutory definition of a servicer.

see https://www.consumerfinance.gov/rules-policy/regulations/1024/2/#b-29-7

Most people think of a “bookkeeper.” A servicer ought to be a party who physically receives the check for payment and deposits into an account owned and controlled by the servicer so it can disburse money to creditors.

Servicing means receiving any scheduled periodic payments from a borrower pursuant to the terms of any federally related mortgage loan, including amounts for escrow accounts under section 10 of RESPA (12 U.S.C. 2609), and making the payments to the owner of the loan or other third parties of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the mortgage servicing loan documents or servicing contract. In the case of a home equity conversion mortgage or reverse mortgage as referenced in this section, servicing includes making payments to the borrower. (e.s.)

If the servicer is not actually receiving the money then it is not the custodian of any record that contains entries of having received the money. that is common sense. But it has far-reaching results in its application in court. If the servicer was not collecting money and not making disbursements from receipts then its records are not business records and they certainly are not an acceptable substitute for a ledger from the REMIC trustee that shows the establishment of the loan account, and the debits and credits entered from payments received or disbursed.

PRACTICE HINT: The company claiming to be a servicer can legally do so even if they have no connection with the actual receipt or control or reporting of money received and disbursed. But their claim in court is overblown for reasons explained below. Their “records” are not business records and not exceptions to the hearsay rule. The exception requires that an employee of the company claiming to be the servicer must have made entries of data detailing the receipt of money by the company (NOT the Creditor). And if you don’t see any disbursements to creditors then it isn’t a loan account. It is merely a printout of third-party data that may or may not be an official report. But if you don’t challenge it, the records will be admitted into evidence and the foreclosure will probably be granted.

What does that mean? It means that the records of the self-proclaimed servicer are not admissible as business records which are exceptions to the rule prohibiting hearsay from being entered into the court record. The judge may not rely upon it — but only if an objection is timely and properly raised.

What does that mean? It means that in the customary case now brought for foreclosure there is no case. Unless the foreclosure lawyer can produce a witness from, for example, U.S. Bank as trustee there is no foundation for introducing any evidence against the homeowner.  Case over. The problem of course is that this happens only if the homeowner is able and willing to endure months or even years (sometimes decades) of litigation. That is the failure of our current forms, rules, and procedures.

When the lawyers and others are sued they defend proclaiming they’re not creditors or servicers and thus protected by litigation immunity my response is not so fast. First of all just because they say something doesn’t make it true. So if they are claiming a fact to be true, it is their burden to prove it — not merely argue it away. Second, and maybe more importantly there is the Federal statutory definition of a servicer for purposes of regulation:

Settlement service means any service provided in connection with a prospective or actual settlement, including, but not limited to, any one or more of the following:

(1) Origination of a federally related mortgage loan (including, but not limited to, the taking of loan applications, loan processing, and the underwriting and funding of such loans);

(2) Rendering of services by a mortgage broker (including counseling, taking of applications, obtaining verifications and appraisals, and other loan processing and origination services, and communicating with the borrower and lender);

(3) Provision of any services related to the origination, processing or funding of a federally related mortgage loan;

(4) Provision of title services, including title searches, title examinations, abstract preparation, insurability determinations, and the issuance of title commitments and title insurance policies;

(5) Rendering of services by an attorney;

(6) Preparation of documents, including notarization, delivery, and recordation;

(7) Rendering of credit reports and appraisals;

(8) Rendering of inspections, including inspections required by applicable law or any inspections required by the sales contract or mortgage documents prior to transfer of title;

(9) Conducting of settlement by a settlement agent and any related services;

(10) Provision of services involving mortgage insurance;

(11) Provision of services involving hazard, flood, or other casualty insurance or homeowner’s warranties;

(12) Provision of services involving mortgage life, disability, or similar insurance designed to pay a mortgage loan upon disability or death of a borrower, but only if such insurance is required by the lender as a condition of the loan;

(13) Provision of services involving real property taxes or any other assessments or charges on the real property;

(14) Rendering of services by a real estate agent or real estate broker; and

(15) Provision of any other services for which a settlement service provider requires a borrower or seller to pay.

So in other words, anyone who is a gleeful participant in the very profitable foreclosure process (becasue they are overpaid by the investment banks) is a servicer for purposes of regulation and enforcement. Bottom line is that they are servicers if they have anything to do with it.  So yes the other bottom line is that foreclosrue process is corrupt.

Nobody paid me to write this. I am self-funded, supported only by donations. My mission is to stop foreclosures and other collection efforts against homeowners and consumers without proof of loss. If you want to support this effort please click on this link and donate as much as you feel you can afford.
Please Donate to Support Neil Garfield’s Efforts to Stop Foreclosure Fraud.



Neil F Garfield, MBA, JD, 74, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.

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5 Responses

  1. Javagold is correct — debt collectors from the onset. UNSECURED.

  2. According to my mentally derailed PennyMac, they are EVERYTHING.

    They are Servicers, creditors, buyer of my alleged loan, issuers of securities backed by my loan, investors who purchase securities backed by my loan – just name it.

    And the Paying Agent who received my money from Servicer PennyMac to distribute them to investors PennyMAc is BONY. In other words, money manager who is responsible for disbursements is BONY. Opps, BONY, you are in a very hot water….

    All while HUD who guarantees my payments to investors PennyMac has no idea about anything PennyMac said.

    I don’t even know PennyMac mobsters belong – jail or mental health clinic for hopeless schizophrenics, the disorganized type with delusions

  3. Nothing more than low life debt collectors trying to collect on UNSECURED debt. How they are able to Fraudclose is a whole different fraud. The System is a Lie.

  4. Note, there is no definition for “loan.” Also note, re your highlighted parts of the definition for “servicer” … I would add and argue, “amounts received” should also be highlighted and if payments were not made, they could not be received and therefore nullifies servicer status as well. Word games with bureaucrats and lying lawyers… always (not) fun… may the parsing begin!

  5. There can be many levels of “servicing” — starting from a settlement service to sub-servicers – to data servicers – to Master Servicers. But, in the case of PLMBS REMIC trusts — the only servicing that matters is the MASTER SERVICING RIGHTS. There has to be authority to them from the TRUSTEE. Once these PLMBS trusts dissolved – how were MSR transferred? Also, the prospectus/PSA claims “Servicer” collection account must be directly linked to trustee Distribution account. Servicers never directly pay investors — and investors have been paid out. So if servicers are directly paying a undisclosed creditor – it is not under the guise of the PLMBS or its trustee.

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