After all your work choosing a mortgage lender, filling out the application and supplying documentation, and getting the loan approved, you may be surprised to find out that your relationship with your lender is a relatively short one. Mortgage lenders often sell the loans that they originate, in order to bring in income so that they can turn around and ---- no surprise here -- make more loans.
If your mortgage loan is sold, the new owner must, by law, notify you of that fact. (This is different from the notice that your mortgage servicer must send you if the servicing rights are transferred. Learn more in What Happens If My Mortgage Servicer Changes?)
Read on to learn more about the difference between a mortgage owner and a mortgage servicer, when the new owner of your mortgage will send you notice about an ownership transfer, and what sort of information the notice will contain.
First, let’s define the terms “lender,” “owner”, and “servicer” when it comes to the mortgage business.
The mortgage lender is the financial institution that loaned you the money. The lender is the loan owner at this point. Later on, the lender may sell the mortgage debt to another entity, which then becomes the new owner of the loan.
Mortgages are bought and sold frequently in the mortgage industry. The sale of your mortgage loan to a new owner does not affect the terms or conditions of the mortgage contract.
A mortgage servicer handles the day-to-day tasks associated with mortgage loans, such as collecting and processing payments, responding to borrower inquiries, and managing escrow accounts.
The servicer might be the lender that gave you your loan (or a subsequent owner of the loan). Or, it might be a separate company that acts on behalf of the owner. If a separate company is the servicer, the owner of the loan will rely on that company to handle the day-to-day (or month-to-month) management of your mortgage account.
In 2009, President Obama signed the Helping Families Save Their Homes Act of 2009 into law. Among other things, it amended the Truth in Lending Act to require that borrowers get notice when the mortgage debt on their primary home has been sold, transferred, or assigned to a new creditor. (Learn about mortgage assignments.)
The creditor that is the new owner or assignee of the mortgage debt must notify you about the change of ownership no later than 30 days after the sale, transfer, or assignment.
The notice that your new lender sends to you must include:
If your mortgage debt is sold and you get an ownership transfer notice, this does not necessarily mean that the servicing rights to the mortgage were also sold or that you will get a new servicer.
How you’ll know if your servicer changes. In most situations, your old servicer must provide you with a notice of servicing transfer not less than 15 days before the effective date of the transfer and your new servicer must provide a servicing transfer notice not more than 15 days after the transfer date. Or the servicers might choose to send a combined notice not less than 15 days before the transfer.
If you have questions about your mortgage loan, contact your servicer. It is important that you send your monthly payments to the servicer of your mortgage, not the loan owner (unless the owner is also the servicer). You should also direct any questions that you have about your mortgage loan to your servicer.
How you can find out who your servicer is. To find out who your servicer is, check your monthly mortgage billing statement or payment coupon book. The servicer is the company that you make your payments to.