What Happens If My Mortgage Servicer Changes?

Keeping track of who you need to send your home mortgage payments to.

If your mortgage loan is transferred to a new servicer, your current servicer (the company to which you make your monthly payments) and the new servicer must, if your case is a typical one, each provide you with a notice.

Read on to learn more about when you’ll receive the notices, what sort of information they will contain, and how much time you get before you have to start making your payments to the new servicer.

How Mortgage Servicing Transfers Work

Servicing transfers happen all the time in the mortgage business. (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.)

After you take out a mortgage loan, it is likely that the lender will sell the loan or sell 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.

What Type of Notice You’ll Get If Your Servicer Changes

If a servicing transfer occurs, you’ll get one or two notices letting you know that the servicer for your loan has changed and that you'll need to send your payments to the new servicer. (The purpose of the notices is to give you adequate warning before you have to start sending mortgage payments to a new servicer rather than the old one.)

Notice from the old servicer. In most cases, the transferring servicer must provide you with a notice not less than 15 days before the effective date of the transfer.

Notice from the new servicer. Generally, the new servicer must provide you with a notice of transfer not more than 15 days after the effective date of the transfer.

Sometimes the servicers use a combined notice. 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.

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).

You Can Still Make Payments to the Old Servicer for 60 Days After the Transfer Date, Though You Probably Shouldn’t

Under federal law, you are allotted a 60-day period starting on the servicing transfer date during which you can still send your mortgage payments to the old servicer rather than the new servicer (even though the new servicer is the proper recipient).

During this time, you will not be assessed a late fee and your payment will not be reported late to the credit bureaus if the old servicer receives your payment on or before the payment due date (including any grace period you get under the mortgage loan documents).

The old servicer is then supposed to forward the payment to the new servicer or return the payment to you. In rare cases though, the old servicer may lose track of the payment or deposit the payment in its account, but neglect to send the funds on to the new servicer. For this reason, it is best to take careful note of any changes in your loan servicer, and start sending your payments directly to the new servicer once the transfer date occurs.

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.

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