Function

• Mortgage custodians hold the original physical paperwork for mortgages, including the mortgage note and other signed loan papers. Custodians keep other original documents necessary to prove the legality of the loan, such as a power of attorney from a borrower to the person who signed the mortgage for her. The custodian is responsible for keeping the paperwork intact, checking the documents for accuracy and keeping papers available to the lender.
  
  

Features

• Mortgage custodians have detailed agreements with each lender serviced. The agreements cover the process to transfer the loan from the owner to the custodian, the necessary forms and both parties' responsibilities. Custodians verify the accuracy of the loan documents received, such as checking the borrower's name, the loan amount and account number against the information from the lender. Custodial agreements typically contain a cancellation clause, giving the lender the right to end the arrangement without stating a reason. The custodian must transfer the mortgages to the lender or another custodian, as directed by the lender, upon agreement cancellation.
  
  

Effects

• A lender or any person with the legal right to get the original mortgage documents must go through the custodian to get the papers once the transfer from the lender is complete. Custodians typically keep the paperwork in a filing system separate from other company documents to ensure safety. The lender transfers any new documents related to the loan to the custodian.
  
  

Considerations

• The custodian does not "own" the mortgage loan, and all payments still belong to the lender. Borrowers must go to the lender for questions about the loan and customer assistance. A lender that is insolvent commonly has documents moved to a temporary custodian, as approved by the Federal Deposit Insurance Corporation, to ensure the paperwork is safe during the transition to a new lender or servicer.
  
  The custodian is legally liable to the lender or owner of the mortgage for losses because of lost or destroyed mortgage and borrower documents.