Be aware that closing may not be the end of your loan process. Now you need to become familiar with loan mortgage transfers. It is common in the mortgage industry to transfer loans to other companies for servicing. Lenders sell loans for many reasons, and sometimes even before you make your first mortgage payment.

Do not be alarmed if that happens to you. Your loan terms will not change, you will be just sending your mortgage payment to another company, at another address. Make sure you read all correspondence related to your mortgage loan transfer, and learn what to expect during and after the transfer.

About the Transfer of Loan Servicing

A transfer of loan servicing occurs when your existing mortgage lender transfers your home loan to another lender. Loan servicing means collecting your monthly mortgage payments, interest rates, insurance, and taxes.

The transfer does not change in any way the terms of your original loan. The new lender will accept the same payment amount, interest rate, and payment schedule. The only difference is that you will make your payments to a different company.

Transferring your loan service can happen immediately after closing or many years later, and it may happen several times during the life of your mortgage loan. The Real Estate Settlement Procedures Act (RESPA) requires lenders to provide the Mortgage Servicing Disclosure Statement. This disclosure requires lenders to explain if they intend to service the loan or transfer the servicing to another lender.

Loan Transfer Notifications

You will receive one or possibly two notifications to let you know that your loan servicer is changing. The purpose of these notices is to provide you with enough time to send your mortgage payment to the new lender.

• One notice will be coming from your current lender, at least 15 days before the effective date of the transfer.
• Another notice will be coming from your new lender, no more than 15 days after the effective date of the transfer.
• It is possible to get just one single notice, coming from both your current lender and the new lender, and in that case the notice is provided less than 15 days before the effective date of the transfer.

The notices will include information about the transfer, such as the new lender’s name and address, the date your current lender will stop accepting your payments, the date your new service will begin accepting your payments, contact information, information about your rights, and what to do if you have any questions.

Loan Servicing Transfer Scams

When you receive notification of your loan servicing transfer, make sure you receive a letter from your current lender and one from your new lender (or a combination of both).

If you receive only a letter from the new lender, without notification from your current lender; be aware that this could be a mortgage scam. Do not send any money.

The best way to ensure that your loan servicing was transferred is to contact your current lender. Ask details about the new lender to confirm the transfer.

Loan Transfer Grace Period Protection

Under federal law, you have a 60-day grace period, starting on the servicing transfer date, during which you will not be charged a late payment fee if you send your mortgage payment by mistake to your previous lender. If your payment gets to your previous lender within this grace period, the payment cannot be reported as late to any credit agency. This protects you in case there is a problem setting up your monthly loan payments with your financial institution.

Be Ready for the Loan Transfer

Your mortgage loan may be transferred at least once during the life of your mortgage. Make sure you:

Expect the loan transfer notifications – Be ready to receive a letter from your current lender and one from your new lender (or a combination of both) explaining the details of the transfer.

Verify the loan transfer notifications – Make sure the information contained in both notices is accurate, including your name and account information.

Update your payment instructions – Inform your bank or financial institution to make your monthly mortgage payments to the new lender. You need to provide the name and address of the new company.

Contact your homeowner’s insurance company – Verify that your insurance company has updated your policy with the new lender information.

Working with your New Lender

After the transfer is complete, make sure you send all future payments to the new address. Your payment amount should not change. If you have any doubts, you can always compare a statement from your previous lender with the new statement. Also, keep in mind that your mortgage may be sold again.

Make sure you contact your new lender with any questions or concerns regarding your account. Your lender can provide you with the information you need to help you manage your mortgage account.