By the time a file makes it to closing, a borrower has usually spent weeks or months working with a particular lender. One question that comes up often during closing is whether the borrower will stay with their lender, or whether their loan will be sold to a new servicer. While some lenders are moving towards keeping their servicing in-house, in most cases, it is still the later – the mortgage is sold to a new servicer, sometimes even before the first payment. The good news is that the transfer is usually seamless and is nothing to worry about or stress over. However, often questions arise about why the loan was sold or how the borrower will be affected. Here are three things to remember if your loan is sold:
1. It has nothing to do with you personally. Lenders usually have a finite amount of resources from which to lend. When they sell the mortgage to a new servicer, the sale frees up the resources to continue lending to other customers. However, the sale of the servicing has nothing to do with you as a borrower. It will not keep you from returning to your original lender for other loan products or a future refinance if you so desire.
2. Nothing changes about your loan, except where you send your payment. Your loan amount, interest rate, and repayment terms all stay the same. The only thing that changes is the company and address where you send your payment. While it can be a little bit of a burden to change automatic draft or automatic bill pay arrangements, you can rest assured that the change in servicing should not cause any significant adverse effects.
3. You will be notified in plenty of time to arrange accordingly. Your closing attorney probably notified you at closing that there was a chance your loan would be sold. Sometimes we know at closing who the new servicer will be, and in those cases you may receive a “Notice of Servicing Transfer.” However, if your lender decides to sell the servicing of your loan after closing, you will receive a “goodbye” letter from your current servicer explaining who your new servicing company will be and the address where you should send your next payment. You will also receive a “hello” letter from your new servicer with the same information and explaining your payment options. If for some reason you only receive one of these letters, be sure to contact your current servicer before your payment due date to verify whether your loan is actually being transferred.
The sale of your loan servicing should not be cause for panic. However, if issues arise, remember that it is always easier to handle a problem as soon as it arises. If your loan is being transferred and you have questions or concerns, you should contact your servicer or your attorney as soon as possible.
Published by Emily Price on February 3, 2017