Mortgage Servicing
Once you have closed on a mortgage, lenders will frequently sell the loan to another lender or servicing company. Like the original lender, a servicing company is set up to collect your monthly payments as well as manage your escrow account. Many of my clients worry about potential problems with having their loan change hands.
Over the years, your mortgage has the potential to be sold several times. Before any transfer of servicing, you must be notified in writing of the change and its effective date. From the effective date forward, you are responsible for making your monthly payment to the new service provider. The written notice should include the following information:
1. Name and address of the new mortgage servicer.
2. The last date your current mortgage servicer will be accepting your mortgage payments.
3. The date your new mortgage servicer will begin accepting payments.
4. Free or collect telephone numbers to call for more information about the transfer of service for both your current and new mortgage servicers.
5. Notice of whether you may continue any option insurance (such as disability insurance). Also what action, if any, you have to take to maintain coverage. As well as whether the insurance terms will change.
Never at anytime your servicing is changed to another company can the terms and conditions of your original mortgage be changed. The only exception are any terms and conditions related directly to the servicing of the loan.
You have a grace period of 60 days after a transfer of servicing to protect you from a late charge if you send your mortgage payment to the old servicer by mistake. Additionally, the new servicer cannot report a late payment to the credit bureaus for 90 days following the transfer.
Should the transfer result in a problem with your payment history, contact the new servicer in writing. While the dispute is being investigated, be sure to continue to make your payments timely. All disputes must be addressed by the new servicer within 60 days.