Loan Servicer

Full definition

When you take out a personal loan, the company you make payments to (the servicer) may not be the company that originated the loan. Lenders frequently sell loan portfolios to investors or specialized servicing companies. The terms of your loan cannot change when sold, but who you deal with operationally does. What servicers do: Process your monthly payments. Manage your account record and payment history. Handle hardship requests, deferments, and forbearance applications. Send payoff statements when you request them. Report payment activity to credit bureaus. Manage collections if payments become delinquent. Your rights when a servicer changes: Federal law requires your original lender to notify you in writing at least 15 days before transferring servicing. The new servicer must send a welcome notice within 15 days of assuming service. You have a 60-day grace period during the transfer in which you cannot be penalized for sending payment to the wrong servicer. Common servicer transfers: Personal loans originated by marketplace lenders (LendingClub, Prosper) are often sold to institutional investors immediately after funding; the platform may continue servicing or hand it to a third party. Student loan servicing transfers are very common and have caused significant consumer confusion as multiple servicers have exited the market. Finding your servicer: If you are unsure who your current servicer is, check your credit report. The servicer appears as the active creditor on the tradeline. For student loans, the National Student Loan Data System (NSLDS) shows current servicer assignments.

• Origination fee
• Personal loan
• Credit report