Do You Skip a Payment When Your Mortgage Is Transferred?
Ensure continuous mortgage payments when your loan servicer changes. Understand the process and manage your obligations smoothly.
When your mortgage is transferred, do not skip a payment. Mortgage transfers are common in the financial industry and are subject to regulations designed to protect borrowers. Your payment obligations remain continuous, even as the company managing your loan changes.
Understanding Mortgage Transfers
A mortgage transfer typically involves a change in the loan servicer, the company responsible for collecting monthly payments, managing escrow, and handling other administrative tasks. This transfer does not alter your mortgage’s original terms, such as interest rate, monthly payment, or loan duration. The underlying loan agreement remains unchanged; only the entity receiving payments shifts.
Federal regulations, including the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA), mandate clear notifications for mortgage servicing transfers. Your former servicer must send a “goodbye” letter at least 15 days before the effective transfer date. Your new servicer will send a “hello” letter within 15 days after the effective transfer date. These notices, sometimes combined, provide essential information: the effective date, contact details for both servicers, and instructions on where to send future payments. They also clarify that the transfer does not impact the core terms of your mortgage.
Maintaining Payment Continuity
Ensuring payment continuity during a mortgage servicing transfer requires proactive steps. Upon receiving the “hello” letter from your new servicer, carefully review it for updated payment instructions, including the new payment address and your new account number. This information is crucial for directing your payments correctly.
If you use automatic payments, such as online bill pay or direct debits, update these arrangements with the new servicer. You typically need to cancel automatic payments with your previous servicer and set up new ones. Escrow accounts, which hold funds for property taxes and insurance premiums, generally transfer along with your loan’s servicing. The new servicer assumes responsibility for managing and disbursing these funds. Keep detailed records of all communications and payment confirmations throughout this transition period.
Resolving Payment Discrepancies
If you encounter a problem, such as a misapplied payment or a failure to receive notifications, contact both your old and new servicers promptly for clarification. Federal law provides a 60-day grace period from the effective date of the transfer, during which payments mistakenly sent to the old servicer cannot be treated as late, and late fees cannot be assessed. However, always send payments to the correct new servicer as soon as you have their information.
For persistent problems, submit a formal “Notice of Error” or a Qualified Written Request (QWR) to your servicer under RESPA. This written request should detail the issue and be sent to the servicer’s designated inquiry address. The servicer must acknowledge receipt within five business days and generally has 30 to 45 days to investigate and resolve the issue. Continue making regular mortgage payments while a dispute is resolved to avoid further complications. You can file a complaint with the Consumer Financial Protection Bureau (CFPB).