You comparison shopped, choosing your mortgage lender carefully. Shortly after closing, you receive a letter from a new company introducing themselves as your mortgage servicing provider. What does this change really mean?
Here is what you need to know about your mortgage being sold to another company.

Why Are Mortgages Sold?

From the perspective of a borrower, the “sale” of your mortgage servicing usually means that you will be sending your monthly payment to a new company. Mortgage originators are entities that work with borrowers to set up and conduct the mortgage transaction. Mortgage servicers handle the administrative duties of the mortgage such as collecting monthly payments or managing escrow accounts.
Many mortgage companies do not service loans and as a result sell your loan shortly after your closing to a mortgage servicer. It is not uncommon for your mortgage to be ‘transferred’ from one mortgage servicer to another.
It is required that all lenders disclose whether your loan will be sold, as well as the percentage of loans that they typically sell.
The terms of your loan will remain the same and your payments will only change if factors outside the scope of your loan, such as mortgage insurance, or property taxes change. These types of changes will take place regardless of whether your loan is sold to another company.

Who Actually Owns My Mortgage?

The majority of home loans are guaranteed or issued by Fannie Mae, Freddie Mac or the FHA, government-chartered companies that purchase loans from lenders to free up money so they can then lend to other mortgage borrowers. As a mortgagor, you do have certain rights. Similarly, the lender, or mortgagee, has legal and fiduciary responsibilities to ensure you are treated fairly. Some of those rights are as follows:
  • Your current lender must provide you with a loan ownership transfer notice when your mortgage is sold.
  • The new mortgage servicer must notify you within 30 days with their name, address, telephone number, date of transfer and whether the transfer of ownership will be a public record.
  • During the transfer of your loan, there is a 60 day grace period where you won’t be charged a late fee for accidentally sending a payment to your previous mortgage lender.
It is recommended that you read the statement from your new mortgage servicer very carefully to make sure that all of the information is accurate. You should contact the new mortgage servicer immediately if you spot any issues or errors.
Overall, the sale of your loan should be seamless, but there are three common issues to watch out for:
  1. Confusion: In order to avoid late payments, make sure that you carefully read all correspondence from you new servicer and take note of when you will need to begin making your payments to them. Contact them if you have questions about who, when and how to make your payments.
  2. Different Features: When your lender changes, there is the potential for the loss of features like online account access or paperless statements that every provider may not offer.
  3. Bad Timing: You may not know if and when your loan will be sold. If you are in the process of a loan modification or refinance when your loan is sold, you should not have to start the process all over again with your new mortgage servicer. However, you should keep accurate records of what you have sent and received to ensure there are no issues with your loan modification that result from the transfer to your new servicer.

It Pays to Pay Attention to Your Mortgage

Although it can sometimes be confusing to homeowners, the common practice of transferring mortgage servicing enables lenders and servicers to remain stable and profitable—freeing up more funds for home buyers like you. If your loan is sold, be proactive with questions and organized with your new payment information. Paying attention to this quick and easy process will lead to a stress-free transition for you and your new mortgage servicer.
When you originate your loan with Northpoint Mortgage, our commitment to you does not end at closing. If your loan servicing is sold, please know that we still consider ourselves your lender for life and want you to always call us first for questions or future transactions.