Below we will give a brief explanation as to what happens when your loan is sold to a new servicer. It’s really not that bad. Unless you of the many struggling homeowners who are currently trying to modify your mortgage or short sale your property.

When your mortgage sold to another servicer while you are still making payments, it will not affect your loan too much at all. The main difference you will have is that you now have to make your payments to another company. There are certain laws in place that will allow you time to figure out who you will be making your payments to, and to make sure they do not change the terms of the original agreement.

The only time this may become a problem is when you are currently trying to workout a solution for your mortgage such as a loan modification, short sale, or other types of repayment plans. If your loan happens to get sold in the middle of working out an agreement you will more than likely be required to start the process over with your new servicer.

This has been an ongoing problem for the past couple of years because of many borrowers are attempting loan workouts with their mortgage servicer. Banks have been shut down left and right and because of this, borrowers are more confused than ever. Many times the previous servicer will not even inform their customer they are selling their mortgage to a new servicer. Therefore the borrower has no idea their loan was sold until they get a new statement in the mail.

Years ago when mortgages were sold or transferred to new servicers, often times the borrower was the last one to find out about the transaction. This caused monthly payments being sent to the wrong servicer, unneeded late fees to accumulate, and credit ratings destroyed.

However, today homeowners have right under the Real Estate Settlement and Procedures Act (RESPA) that protect them from such events. therefore when a mortgage is sold or transferred over to a new servicing company, it is the lender’s duty to provide proper notice of who it is to be sold to, and when the mortgage is to be sold.

For instance, when a mortgage is sold that does not mean the new servicer can change the original terms of the loan. Just because your loan is being serviced by another company, your mortgage is still a contract and the lender must abide by the original interest rate and monthly payment.

The main difference is the address you send your mortgage payment. A new lender and/or servicer generally means that there will be a new location where the monthly payments will be sent, and you as the homeowner must be sent a notice in writing detailing the new location and if applicable, account number.

The lender has sixty-days after the date of transfer in which you can still make payments to your servicer. If the payments arrive in a timely matter, no late fees should be accumulated. This is in efforts to provide a reasonable time period for the borrower – a grace period.

If you are looking to obtain a copy of your original mortgage note you should send your lender a qualified written request form (QWR). This is a written request for all of your original loan documents you should have received at closing. The lender has only twenty days to respond to your request.This letter is best sent certified mail with a return receipt requested.

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Moe Bedard
My name is Maurice "Moe" Bedard. I am the founder of America's #1 Mortgage Forum, My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.