What are loan servicing fees?

Loan servicing fees refer to the charges that a lender imposes for managing a borrower's mortgage loan throughout its term. This management involves various responsibilities, including collecting monthly payments, maintaining payment records, responding to borrower inquiries, and managing escrow accounts for property taxes and insurance. Essentially, these fees compensate the lender for the ongoing administrative tasks and support necessary to keep the loan in good standing.

When considering the context of other potential fee types: property inspection fees are related to verifying the condition of a property but do not pertain to the ongoing management of a loan. Loan origination fees are charged at the beginning of the loan process for processing the loan application and are distinct from servicing fees. Title insurance fees are related to protecting against potential ownership disputes and do not involve loan management. Therefore, the role of loan servicing fees is distinct and integral to the lifecycle of a mortgage, highlighting how the lender facilitates the ongoing aspects of loan management and borrower support.