Which activity is part of loan servicing?

Loan servicing encompasses various activities related to managing a loan after it has been originated. The collection of payments is a fundamental aspect of loan servicing, as it involves the ongoing management of borrower accounts through the receipt and processing of payments for principal and interest, as well as handling late payments or defaults.

This function ensures that borrowers maintain their obligations under the loan agreement and allows the lender to track the status of the loan. Effective loan servicing contributes directly to the health of the loan portfolio and can enhance customer satisfaction by providing clear communication and support to borrowers.

In contrast, determining loan eligibility, setting interest rates, and conducting appraisals are activities that primarily occur during the loan origination process and not part of ongoing loan servicing. Each of these activities serves a different purpose in the lifecycle of a loan, highlighting the distinct phases of lending and servicing.