Mortgage servicing rights are often bought and sold between financial services companies multiple times over their lifespans. It may result in you submitting your payment to a different entity, but should not change the terms of your loan.
You probably expect that you’ll be making your mortgage payment to the same lender for years to come. But it’s common among lenders with no or smaller servicing operations that your mortgage’s servicing contract may be sold — often right after your closing.
Some lenders also sell the actual mortgage itself — groups of mortgages often get bundled into a package of assets that can be sold, freeing up capital for the lenders to make more loans.
All of this should be a fairly seamless process for you, the borrower. Here are some common questions that people have when their mortgage servicing rights are sold to a different company.
Common questions people have about their loan servicing being sold
Lending companies see your mortgage as a financial asset. They receive income in the form of the interest you pay over time. These institutions may bundle mortgages from many individuals and sell them to another company. A lender would use the proceeds from such sales to have the money to make new loans to other borrowers.
Do the terms of my loan change when my loan is sold?
No. The terms, such as the length and interest structure of your loan, do not change when your mortgage is sold. If you have a fixed-rate loan, your schedule of interest and principal payments stays the same. If you have an adjustable-rate loan, a rate adjustment may happen as part of the switch, just as it could if your loan had not been sold, but the timing might be sooner than the first company would have made it.
Does a lender have to tell me if my mortgage servicing is changing?
Yes. When your mortgage servicing is transfered, both your old and new mortgage companies must notify you at least 15 days before the change, and the new company will inform you within 30 days about how and where to make payments. The notices will disclose the name, address, and telephone number of the new servicing company, along with the date of transfer. The notices will also tell you whether you will be contacting a different person if you have issues concerning your loan payments, your right to rescind a loan, or other matters.
How do I know where to send my payments after my mortgage is sold?
The notices you receive that your mortgage has been sold will include information about whether your mortgage servicer is changing or staying the same. A loan may be sold without the mortgage servicer changing. Pay careful attention to the notice’s details about where to send your payments. You have a 60-day grace period if you make a mistake and send a payment to your old servicer, but you can plan ahead and not need to use it.
Can I still make automated payments on my loan?
In many instances, yes, but be sure to check with the new mortgage servicer. You might need to re-establish your automatic payment schedule and details. You will still be responsible for monthly payments while setting up auto payments, so be ready to make a payment by phone or mail to keep current with your new loan owner. Use the contacts in the notices you receive from your old and new mortgage servicers to ask any questions about making payments.
Do I have to accept the change?
Technically, no, but you should not feel alarmed if your mortgage is sold. Remember, the terms of your loan stay the same, and the sale of mortgages and transfer of mortgage servicing can be relatively common.
You can exercise your legal right of rescission (basically saying you do not agree to keep borrowing) during the 15-day notice period if your loan is sold. Be warned: To do this, you would need to have a plan in place to retain ownership of your home, either by paying off your full loan balance immediately or refinancing your loan with a different company. This isn’t easy for most homeowners to do, and it isn’t a benefit if you are comfortable with the terms of your loan in the first place. If you learn that your loan is being sold to an institution that you don’t want to work with, you could investigate whether refinancing is the right decision for you all around.
Always check your information
Scammers continuously look for new ways to fool people, and the sales of mortgages from one company to another are one way they could try to obtain your financial information fraudulently. The scammer would send out a letter, text message, or email that appears to be from a financial institution announcing that they are the new servicer on your mortgage. Always be careful about your financial information. Remember that you should receive notifications from both the old owner and the new owner of your mortgage. If you ever have any questions about the validity of a letter, text message, or email you receive, consult the records you already have, use the contact information for your mortgage servicer from those records, and get them to verify any suspicious or unclear claims that you need to provide financial information.
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