I have wondered how a SL servicer profits from their service to the borrower, government and lender. I have always assumed that interest goes to the lender, the entity that is backing the loan. Since the SL servicer is simply managing the process of accounting, billing and receiving, where do they get their profits from? I understand that there must be some arrangement between lenders and servicers resulting in the servicer receiving a flat fee or small percentage of each payment they collect. I guess I was wondering if late fees or any other penalties are ungoverned nor received by the lenders. Does the servicer get to retain any charges above normal payment amounts collected?
