Lender. Servicer. Trustee. MERS. Note-holder. Mortgagee. Who are all these people? There is no doubt that the lending industry has become needlessly complicated. Part of the reason for this is to keep consumers in the dark about their loans. Many borrowers receive letters and notices from companies whose name they don’t even recognize. Consider this post an introduction to some of the more common entities involved with your mortgage loan.
Long gone are the days of walking into your local bank, taking a loan in exchange for a mortgage, and having that bank serve as the mortgagee and the entity to which you owe money for the life of the loan. Today, loans are bought, sold, chopped up, and packaged for a variety of reasons. At any given time, your loan could involve half a dozen or more different entities, each serving a completely different purpose.
The entity that lent you money is the Lender. Funny enough, it is possible that the Lender was not the actual source of the funds, but it is generally the party in whose favor you executed the promissory note and to whom you owe (at least at first) the money.
The Mortgagee is the entity to whom you granted the mortgage. The Mortgagee is often, but certainly not always, MERS, which is an entity created by a number of mortgage lenders to serve as a way to avoid having to assign (and then record assignments of) mortgages as the loan gets transferred. In other words, as the actual loan/note gets transferred, the mortgage itself continues to be held by MERS until there is some need to transfer it out (like the initiation of foreclosure).
Loans and notes are often ultimately sold to a Securitized Trust which may only act through its Trustee. The Trust will often have some weird name that may reference the originating Lender and a series of numbers. The Trustee will often be a bank that actually has no independent interest in your loan or mortgage separate from its interest as the Trustee for the Trust.
Promissory notes are negotiable instruments, meaning that if they are properly negotiated, the entity that “holds” the note is entitled to enforce it. In other words, the Note-holder is the party that you usually, but not necessarily, owe the money to. The Trustee for the Trust is usually the Note-holder until there is a reason to transfer the note (again, like the initiation of foreclosure).
Despite all of the above, the only company name you may recognize at all is the Servicer. The Servicer is the company that services the loan (let’s save discussion of master servicers and sub-servicers for another day). That means they collect payments, send monthly statements, field calls, and generally deal with the borrowers. They usually have no interest in your loan or mortgage but receive a commission or fee. These Servicers are often divisions of, or otherwise affiliated with, the Lender and/or the Note-holder.
I am certain that you don’t understand all of this. That’s OK. In fact, I represented these entities for over a decade before I began representing consumers and I’m sure there are still issues I haven’t fully figured out. This system is in place for a number of reasons, but consumer confusion is an added benefit for these banks and debt collectors. In fact, an Oscar-nominated film was made detailing this purposeful confusion. Do not let this overly complex system scare you into inaction. Enright Law can easily pierce through the nonsense, explain your loan in easy to understand terms, and come up with a course of action dependent on your legal needs. Whether you are fighting foreclosure, or contemplating some lender liability claim, Enright Law can provide you with experienced, aggressive representation to make sure you achieve your goals.