If you make a mortgage payment, but the servicing rights to your loan have been transferred to a new servicer, your old servicer is generally supposed to forward the funds to the company that is now handling the account. However, sometimes things fall through the cracks during this type of transfer, with the result that you might not get credit for a monthly mortgage payment that was sent to the wrong servicer.
Read on to find out what steps you should take to make sure your new mortgage servicer properly credits your account if you mistakenly send a payment to your old servicer.
A mortgage servicer handles the day-to-day duties related to mortgage loans, such as collecting and processing mortgage payments from borrowers, tracking account balances, and handling mortgage escrow accounts, among other things. (The mortgage servicer is the entity to which you send your monthly mortgage payments.)
Sometimes the lender itself is the loan servicer, while other times, it contracts the servicing out to a third-party. The third-party servicer might then hire a subservicer to take on the servicing duties or sell the servicing rights. Servicing transfers occur frequently in the mortgage business.
When your mortgage servicer changes, your old servicer and new servicer must let you know about the change.
Your old servicer must, in most situations, notify you about the change not less than 15 days before the effective date of the transfer, and your new servicer must provide a transfer notice not more than 15 days after the transfer date. (Or the servicers can send a combined notice, not less than 15 days before the transfer.)
The notice will let you know, among other things, on what date you old servicer will stop accepting payments and the date that your new servicer will begin to accept payments. It will also give you a phone number for an employee or department of the new servicer that you can call if you have questions about the servicing transfer, and the transfer date. (Learn more in What Happens If My Mortgage Servicer Changes?)
Once the transfer date occurs, you should start sending your payments to the new servicer. (If your mortgage payment is automatically taken out of your bank account, make sure you update the account so that your bank sends the payment to the new servicer.)
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.
If you sent your payment to the old servicer after the servicing transfer date (even though it should have gone to the new servicer), you should monitor your account with the new servicer to see if the payment gets credited to your account. In most cases, it will be.
For a period of 60 days (starting on the effective transfer date from your previous servicer to your new servicer), the new servicer cannot charge you a late fee or treat the payment as late if you sent it to your old servicer on time. The old servicer is simply supposed to forward the payment to the new servicer (or send it back to you).
Unfortunately, it is not unheard of for the old servicer to neglect to send the funds on to the new servicer (and not send the payment back to you), which means the new servicer won’t credit the payment to your account.
The first step to take if your payment doesn’t get credited to your account with the new servicer (and the old servicer doesn't return it to you) is to call the new servicer to explain the problem. Check the notice of servicing transfer that you received to find the new servicer’s phone number (or look online).
If the person you speak to cannot immediately resolve the problem, ask when you should expect a resolution and a return call about the issue. Be sure to get the name of the person you speak to and make a note of the time and date that you call.
You should also follow up by sending a letter to the servicer.
If calling the new servicer doesn’t resolve the issue, you should send what’s called a “notice of error” (a letter) to both the new servicer and the old servicer along with copies of any relevant supporting documents. (Look on your monthly billing statement to find the address to which you should send the notice of error.)
Both the new and old servicers must respond. 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. (Learn more about How to Dispute Errors Made by Your Mortgage Servicer.)
Include supporting documentation with the letters. You might need to send copies of the canceled check or of your bank account statements to prove that you sent the payment to the old servicer.
Retain copies of what you send. Keep a copy of the letters and any enclosures for your records. Also, do not send any original items, such as cancelled checks, along with your letters -- only send copies. It’s usually best to send your letters by certified mail, and request a return receipt. You can also send the letters by fax, and keep copies of the transmittal confirmation for your records.
What to do if the servicer doesn’t respond to your letter. If the servicer does not respond to your notice of error and correct the problem within the time frames required by law, you may want to consult with an attorney and file a complaint with the Consumer Financial Protection Bureau (CFPB).
If you have a dispute about an uncredited payment, you must continue to make your regular mortgage payments while the issue is being resolved. Otherwise you could risk going into default and face a possible foreclosure.