I just found out my mortgage servicer changed, but I sent my payment to the old servicer. What now?

Question

I just received a notice that I have a new mortgage servicer. Why did a transfer happen? Did I do something wrong? Also, I sent my recent payment to the old servicer. What should I do?

Answer

If you find out that your loan servicer is changing, don't take it personally. Servicing transfers frequently happen in the mortgage business. Your loan was likely one of thousands in a transfer bundle that was based on a business decision, not on your value as a customer.

Also, you probably don't need to worry that you sent your recent payment to the old servicer. After a servicing transfer, you get a limited amount of time during which you may send your mortgage payments to the old servicer rather than the new servicer, even though the new servicer is the proper recipient. The old servicer then has to forward the payment to the new servicer or send it back to you.

Mortgage Servicing Transfers

After you take out a mortgage loan, the lender might sell the loan or the right to service the loan (separate from ownership of the loan) to a different party, which will then service the loan. The new servicer might then hire a vendor, called a "subservicer," to take on the servicing duties, rather than servicing the loan itself.

If a servicing transfer happens, you'll get one or, possibly, two notices. These notices will let you know that the servicer has changed and that you must send your payments to the new servicer. The reason for the notices is to give you sufficient warning before you need to start sending the payments to a new servicer instead of the old one.

In most cases, the transferring servicer must provide you with a notice not less than 15 days before the effective date of the transfer. The new servicer must provide you with a notice of transfer not more than 15 days after the effective date of the transfer. But the notices from the old servicer and the new servicer may be combined into a single notice, in which case the notice must be provided to you not less than 15 days before the effective date of the transfer. (12 C.F.R. § 1024.33). These letters are usually called "hello/goodbye" letters in the mortgage industry.

Contents of the Notice

The notice(s) of servicing transfer must, by law, contain the following information:

• the effective date of the servicing transfer
• the name, address, and a collect call or toll-free telephone number for an employee or department of the new servicer that you can contact to get answers to any questions you have about the servicing transfer
• the name, address, and a collect call or toll-free telephone number for an employee or department of the old servicer that you can contact to get answers to any questions you have about the servicing transfer
• the date that the old servicer will stop accepting your mortgage payments and the date that the new servicer will begin to accept such payments
• whether the transfer will affect the terms or the continued availability of mortgage life or disability insurance, or any other type of optional insurance, and any action you must take to maintain such coverage; and
• a statement that the transfer does not affect the terms or condition of the mortgage loan (other than terms directly related to the servicing of the loan). (12 C.F.R. § 1024.33).

You May Make Payments to the Old Servicer for 60 Days After the Transfer Date

Under federal law, you can still send your mortgage payments to the old servicer, rather than the new servicer, for 60 days starting on the servicing transfer date. If you send your payment to the old servicer during this time, the new servicer can't assess a late fee and can't report your payment as late to the credit reporting bureaus—so long as the old servicer gets the payment on or before the payment due date, including any grace period. (12 C.F.R. § 1024.33).

The old servicer is then supposed to send the payment on to the new servicer or return the payment to you. Sometimes though, a payment sent to the old servicer might get lost in the transfer and, as a result, the new servicer might not credit the payment to your account. If the payment you sent to the old servicer isn't credited to your account, call your new servicer.

If you can't clear up the problem, send a notice of error to both the new servicer and the old servicer along with copies of any relevant supporting documents. Under federal law, both the new servicer and old servicer (so long as the servicing transfer occurred less than a year ago) must then investigate and respond to your notice of error. If the servicer doesn't respond to your notice of error, you can file a complaint with the Consumer Financial Protection Bureau or get an attorney to help you resolve the matter.

In the meantime, continue making your regular payments to the new servicer while the issue is pending. Otherwise, you could risk going into default and face a possible foreclosure. After you start sending your mortgage payments to the new servicer, you should monitor at least two payments to make sure the new servicer is correctly applying them to your mortgage loan account.