Mortgage servicing rights (MSR),
Definition of Mortgage servicing rights (MSR):
Mortgage servicing rights (MSR) refer to a contractual agreement in which the right to service an existing mortgage is sold by the original lender to another party that specializes in the various functions involved with servicing mortgages.
A contractual obligation that allows the original mortgage lender of a note to sell the loan servicing functions to a third-party for the purpose of collecting loan payments, setting aside escrows and insurance payments and forwarding principal and interest amounts to the lender. In exchange, the servicing party collects a fee.
MSRs have ongoing administrative duties that are regularly processed for the entire length of a mortgage. Common rights included are the right to collect mortgage payments monthly, set aside taxes and insurance premiums in escrow, and forward the interest and principal portions to the mortgage lender. In return the servicer is compensated with a specific fee, which is outlined in the contract that has been established and entered into at the beginning of the servicing agreement.
How to use Mortgage servicing rights (MSR) in a sentence?
- The original lender pays the servicer a fee for performing this work.
- Nothing changes for the mortgagee except the address to which payments are sent.
- Mortgage servicing rights are sold by the originator of a mortgage to another financial institution, which then takes over the administration of the mortgage, which includes such tasks as collecting payments and forwarding them to the originator.
Meaning of Mortgage servicing rights (MSR) & Mortgage servicing rights (MSR) Definition