What Happens If My Mortgage Was Sold to Another Company?

Mortgages are commonly transferred between companies in the financial industry. This routine practice often occurs right after a loan closes. While a mortgage transfer might seem concerning, the fundamental terms of a borrower’s loan—such as the interest rate, principal balance, and repayment schedule—remain unchanged. This process helps lenders manage their portfolios and maintain liquidity, ensuring they can continue to offer new loans. Understanding these transfers helps borrowers navigate the process smoothly.

Understanding Mortgage Servicing Transfers

When a mortgage is “sold,” it refers to the transfer of servicing rights, which is distinct from the loan’s underlying ownership. The mortgage owner, or investor, holds the actual debt, such as large banks, insurance companies, or government-sponsored enterprises like Fannie Mae and Freddie Mac. The mortgage servicer is the company responsible for the day-to-day administration of the loan, including collecting payments, managing escrow accounts for taxes and insurance, and handling borrower inquiries.

Servicing transfers are a regular part of the mortgage industry. Lenders sell servicing rights to free up capital, allowing them to originate more loans, maintain cash flow, and rebalance loan portfolios. While the company collecting your payments may change, your original loan terms do not.

How Your Loan Is Affected

A mortgage servicing transfer primarily impacts where and how you make your monthly payments. The new servicer will provide new payment instructions, which may include a different mailing address for checks, a new online portal, or a new account number. It is important to update any automatic payment arrangements, such as those set up through your bank’s bill pay service, to ensure payments are directed to the correct new servicer.

Your escrow account, which holds funds for property taxes and insurance premiums, will also transfer to the new servicer. The new servicer assumes responsibility for disbursing these payments on your behalf. While the servicing company changes, the original terms of your loan, including the interest rate, principal amount, and maturity date, remain in effect. This means your monthly payment amount will not change solely due to the transfer.

Your Rights as a Borrower

Federal law, the Real Estate Settlement Procedures Act (RESPA), provides protections for borrowers during a mortgage servicing transfer. Both the old (transferor) and new (transferee) servicers are required to send you a notice of the transfer. The transferor servicer must send their notice at least 15 days before the effective date, and the transferee servicer within 15 days after, though a combined notice is allowed.

These notices must include the effective date of the transfer, the name and contact information of the new servicer, and the date the new servicer will begin accepting payments. RESPA also includes a 60-day grace period starting from the effective date. During this period, if you mistakenly send your on-time payment to the old servicer, the new servicer cannot charge a late fee or report the payment as late to credit bureaus. You also have the right to dispute errors or request information from your new servicer through a written request, to which they must respond.

Actions to Take After a Transfer

Upon receiving a mortgage servicing transfer notification, carefully review both the “goodbye” letter from your old servicer and the “welcome” letter from your new servicer. Verify that information, such as the new account number and payment address, is consistent across both notices. Retain copies of all correspondence related to the transfer for your records, as this documentation can be useful if any issues arise.

It is important to update your payment method with the new servicer promptly. If you use automatic payments through your bank’s online bill pay, you will need to re-establish these payments with the new servicer’s details. If your prior servicer automatically drafted payments, check the transfer notices to see if this arrangement will continue with the new servicer; if not, set up new automatic payments directly. After making your first payment to the new servicer, monitor your account to ensure the payment is correctly applied.

Review your escrow account details with the new servicer to confirm that property taxes and insurance premiums will be handled appropriately. If you suspect a transfer has occurred but haven’t received notification, you can check your credit report or contact your original lender. Should problems arise, such as misapplied payments or incorrect statements, formally communicate with your new servicer to resolve the issue, referencing your rights.