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Mortgage servicing is the ongoing administration of a mortgage after it funds — collecting payments, tracking the balance and interest, confirming taxes and insurance are paid where required, and handling arrears or default — whether performed by the original lender or a separate mortgage administrator.
The entity that funds a mortgage isn't always the one servicing it day to day. In securitization and mortgage-finance-company structures, a mortgage funded by one entity is often administered by another under a mortgage-servicing contract on behalf of investors or trusts — a role OSFI has described as covering payment processing, confirming taxes and insurance are current, maintaining loan records, and, when needed, special servicing on defaulted loans such as demands or coordinating foreclosure action.
In Ontario, this administration function is a separately licensed activity: FSRA licenses mortgage administrators distinctly from mortgage brokers and agents, specifically for entities that service mortgages on behalf of investors. Brokers should be clear with clients about who they'll actually be making payments to, since servicing can transfer to a new administrator over the life of a mortgage without changing the underlying loan terms.
Separate from origination: the lender or investor who funds a mortgage isn't always the entity a borrower deals with day to day; that ongoing administration function is mortgage servicing.
Core tasks: servicing covers processing payments, confirming property taxes and insurance are paid where required, maintaining loan records, and reporting to the lender or investor.
Licensed separately in Ontario: FSRA licenses mortgage administrators as a distinct category from mortgage brokers and agents, specifically for entities that service mortgages on behalf of investors.
Special servicing on default: if a mortgage falls into arrears, servicing can extend to demands, workouts, and coordinating legal or foreclosure action, often through independent Canadian service providers.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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