Servicer Advance

A servicer advance is a payment made by a loan servicer to cover costs related to managing a mortgage loan, such as property taxes, homeowners insurance, or property maintenance, when the borrower has not paid these expenses directly. The servicer advances these funds to protect their investment and ensure bills are paid on time. Later, these advances are usually reimbursed by the borrower or included in the loan balance. Essentially, it’s the servicer’s way of keeping the loan current and protected, even when the borrower is temporarily unable to pay their property-related expenses directly.