Loan servicing includes a number of responsibilities such as collecting monthly mortgage payments from the borrower, remitting principal and interest payments to investors, ensuring sufficient escrow payments are being made by the borrower, and managing default if it should arise. In exchange for these services, mortgage bankers receive a fee. If the outstanding loan balance is $250,000 and the annual servicing fee is 0.35%, what is the monthly fee for servicing the loan?

Question

Quizplus · Accepted Answer

First, we need to calculate the annual servicing fee: 
0.35% of $250,000 = $875

Then, we need to divide the annual fee by 12 to get the monthly fee: 
$875 ÷ 12 = $72.92

Therefore, the monthly fee for servicing the loan is $72.92, which is option A.

Loan Servicing Includes a Number of Responsibilities Such as Collecting