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video 1 what is mortgage surfacing this video the first of 3 in our series on the fundamentals of mortgage servicing is a product of the urban institute's mortgage servicing collaborative it seeks to increase the basic understanding of mortgage servicing and support conversations about how mortgage servicing works today when most Americans buy a home they take out a mortgage the buyer puts down a portion of the cost known as a down payment and they get a mortgage loan for the remainder from a lender with the home serving as the collateral another important party that is essential to successful homeownership is a mortgage servicer servicers sit between the homeowners and the investors which are the owners of the loan servicers are the homeowners primary point of contact for all things mortgage related after the loan is closed at the most basic level mortgage servicers collect homeowners mortgage payments and pass on those payments to investors tax authorities and Home insurer's often through escrow accounts the mortgage servicer has the most active role in helping homeowners who fall behind in their mortgage payments to try to find a way to keep them in their homes if they can or if necessary facilitating a graceful transition when they can't servicers also work to protect investors interests in the mortgaged property for example by ensuring proper homeowners insurance coverage is maintained after the loan is closed the lender decides who services the mortgage some lenders will service their own loans others will sell servicing rights to another company the mortgage servicer is paid a fixed percentage of the unpaid principal balance and is also usually allowed to keep certain fees that they charge homeowners servicing fees are supposed to cover both performing loans where everything is going well and non-performing loans where payments are missed usually only a small percentage of loans are non-performing but during the housing crisis millions of delinquent homeowners needed case-by-case time-intensive assistance from servicers servicing systems were not developed this volume of loans and and often had to be re-engineered and servicers were not adequately staffed for a crisis that became larger than what most had imagined possible when alone stops performing it's the surfacers job to figure out how to get the loan back on track first and foremost the goal is to find a way to keep the homeowner in the home and there are several ways to do that options include a forbearance or repayment plan or a loan modification if the homeowner can't stay in the home servicers facilitate a short sale a deed in lieu of foreclosure or as a last resort a foreclosure for those homes that are foreclosed on the servicer will take on the role of maintaining the property making necessary repairs and generally keeping the house in good condition until the new owner buys it maintaining the property also helps to ensure that foreclosed homes don't look abandoned and lower property values or create an unhealthy or unsafe environment in a neighborhood to learn more about the essential role that mortgage servicers play in the housing market please watch the other videos in the series who was involved with mortgage servicing and default servicing