What is the entity that receives the borrower's payments called?

Study for the California Escrow Exam. Dive into detailed content with flashcards and multiple choice questions, accompanied by explanations and hints. Ensure your success on test day!

Multiple Choice

What is the entity that receives the borrower's payments called?

Explanation:
The key idea is who handles ongoing loan administration and collects the monthly payments. The borrower’s payments go to the loan servicer—the entity responsible for receiving, posting, and managing those payments, as well as related tasks like escrow, records, and delinquencies. After receiving the payments, the servicer distributes funds as needed to the loan owner or investors according to the loan’s ownership structure. The other roles don’t fit this ongoing payment reception: a loan processor works on paperwork during loan origination, Freddie Mac is a secondary-market sponsor/guarantor rather than the day-to-day recipient of payments, and an investment servicer deals with investors’ interests rather than collecting payments from borrowers.

The key idea is who handles ongoing loan administration and collects the monthly payments. The borrower’s payments go to the loan servicer—the entity responsible for receiving, posting, and managing those payments, as well as related tasks like escrow, records, and delinquencies. After receiving the payments, the servicer distributes funds as needed to the loan owner or investors according to the loan’s ownership structure. The other roles don’t fit this ongoing payment reception: a loan processor works on paperwork during loan origination, Freddie Mac is a secondary-market sponsor/guarantor rather than the day-to-day recipient of payments, and an investment servicer deals with investors’ interests rather than collecting payments from borrowers.

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