Understanding the role of a trustee in mortgage-backed securities

May 28, 2024

Learn more about U.S. Bank’s responsibilities as a trustee on a mortgage loan

In the complex world of finance, mortgage-backed securities (MBS) play a pivotal role in the housing market. To understand the dynamics of MBS, it’s important to grasp the roles of the key players involved: the mortgage-backed security itself, the trustee, and the loan servicer.

What is a mortgage-backed security?

A mortgage-backed security (MBS) typically represents an ownership interest in a group of mortgage loans (commonly referred to as a “pool” of loans). Some lenders sell mortgage loans to entities that assemble the loans into pools and then transfer the pools to trusts. Securities are then issued by those trusts and sold to investors, who are entitled to receive a share of the principal and interest payments made by borrowers on the loans in the trusts.

The trustee’s role

U.S. Bank may be identified as a trustee on a loan in a mortgage-backed security trust, which means it handles the legal documents and aspects of the administration of the trust. U.S. Bank does not control any decisions or actions related to loan forbearances, loan modifications, or foreclosure proceedings. These items are handled by the loan servicer.

What is a loan servicer?

The loan servicer for a specific mortgage loan is responsible for the day-to-day administration of the mortgage loans within an MBS trust, which includes collecting monthly payments and handling customer service inquiries. The loan servicer also has sole decision-making authority, subject to contractual terms of the MBS trust, to grant loan forbearances or modifications, and has sole authority to initiate and control foreclosure proceedings.

Contacting the right party for loan inquiries

Because a trustee does not engage in the direct management of the loans or the properties securing them, those with questions about a specific loan or property related to a mortgage loan should contact the loan servicer. The servicer has access to all the pertinent details of the loan and can provide the most immediate assistance.

U.S. Bank established a dedicated toll-free (800) number to handle calls related to loans that identify U.S. Bank as Trustee. That phone number is 800.236.3488 and is monitored from 8 a.m. to 5 p.m. central time Monday through Friday. Our professional staff connects callers with loan servicers that can best address their questions and facilitates communication between key stakeholders (such as cities, housing authorities and servicers) when needed.

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