What to Expect When Your Servicer Has Changed?
As a first-time homeowner with a mortgage, you have a monthly obligation to repay the loan you took to buy your dream home. A mortgage servicer could be the company that receives your monthly payments. During the term of your mortgage, the servicer where you send your monthly payments might change. Don’t be alarmed if this happens. Here are the things you need to expect when your current servicer transfers your mortgage to another company:
You will first get loan servicer transfer notices
Your current servicer will send you a notification that it will transfer the servicing rights to your loan to another company at least 15 days prior to the date of the actual transfer. The new company that will take over the servicing rights to your loan will also notify you of the transfer within 15 days after the actual transfer. In some situations, you may get a combined transfer notice. Aside from the company name and contact information of your new servicer, you’ll learn from the notice the date your current servicer will stop receiving your payments, the date your new servicer will start receiving your payments, and the date when the right to service transfer has been made.
You need to ensure the new servicer receives your monthly payments
Once you receive the servicing transfer notice, it’s important that you determine the date when you’ll start sending your payments to the new servicer. If you’re using an auto payment system provided by your bank or credit union for your mortgage payments, you must contact the provider and update the information so your new servicer will receive your succeeding monthly payments. As you start making payments to your new servicer, you need to closely check your mortgage statement for you to know if your payments are accurately credited.
Keep in mind that your new servicer cannot charge a late fee or consider your payment as late if you accidentally sent your payment to your old servicer within 60 days from the date that the servicing rights to your loan have been transferred.
Mortgage servicers help in loss mitigation
Aside from receiving and tracking monthly payments, mortgage servicers also ensure that the loan goes to you as the borrower and you’ll use the funds to buy a property. Servicers are also responsible for sending notices if you start to miss your monthly dues. If you experience financial hardships, your servicer could offer you viable options to help you keep up with your payments and possibly save your home from foreclosure. During a foreclosure sale, servicers ensure that the proceeds will cover the balance of the funds lent by the lender. By doing so, lenders, and government agencies that secure housing loans significantly reduce their loss if some borrowers default with their mortgages.
Actions you can take to verify a change in servicer
Nowadays that mortgage scams continue to rise, it’s critical that you confirm the legitimacy of the servicer transfer notice that you receive. Initially, you may want to call your previous servicer to verify the servicing transfer and the contact details of the new servicer. Another way to verify the information about your new servicer is to search it on the Mortgage Electronic Registration System (MERS).
You may also want to write a letter to your mortgage servicer if you want to dispute any errors or if you want to get additional information about your mortgage. According to the Consumer Financial Protection Bureau (CFPB), you may get more protections if you write a letter. CFPB has sample letter templates if you want to explain an error or you want to request information to your servicer. When writing a letter, ensure that you clearly express your concerns and that you’ve included your contact details and the details of your servicer.
While waiting for a response, it’s important that you keep up with any upcoming mortgage payments.
Final thoughts about mortgage servicer transfers
Your mortgage servicer might change as you repay your loan. Servicers must notify you beforehand if there will be a change to the servicing rights to your loan. As a homeowner with a mortgage, you will continue making monthly payments to the new servicer. There are ways you can do if you want to verify the information on your servicer.