What Happens When Your Mortgage Is Sold to Another Company?
Your mortgage might be sold, but your loan terms won't change. Discover what to expect, manage payments, and protect your interests.
When a mortgage is sold, ownership of your loan transfers from one financial institution to another. This is a routine and common practice in the secondary mortgage market that generally does not negatively impact the borrower. The original terms and conditions of your mortgage agreement remain in effect, regardless of who owns the loan. This article clarifies what borrowers can expect when their mortgage is transferred.
Understanding Mortgage Transfers
Federal regulations require borrowers receive specific notifications when their mortgage loan transfers from one servicer to another. Both your current and new mortgage servicers are required to send you a notice regarding the transfer. The current servicer must send a notice at least 15 days before the effective date of the transfer. The new servicer must send a notice within 15 days after the effective date, or a combined notice can be sent by both servicers at least 15 days before the effective date.
These notices provide important information about your loan’s new management. They include the effective date of the transfer, the name and contact information for the new servicer, and where to send your mortgage payments. You will also find details about your new account number, if it changes, and information regarding the 60-day grace period for payments. Reviewing these documents helps you understand the transition and prepare for future payments.
Your Mortgage Terms After a Sale
The fundamental terms of your mortgage loan do not change when it is sold to another company. Your agreed-upon interest rate, remaining loan term, and outstanding principal balance will remain the same. Any existing loan modifications, forbearance agreements, or specific provisions from your original loan agreement also stay intact. The terms governing your escrow account, such as how taxes and insurance are collected and paid, will also transfer with the loan.
What primarily changes is the loan servicer, the company responsible for collecting your monthly payments and managing your account. This new servicer becomes your primary point of contact for all mortgage-related inquiries, including customer service and payment processing. While the administrative entity managing your loan changes, the core financial obligations and benefits outlined in your initial mortgage contract are preserved.
Managing Your Loan Payments
Once you have received and reviewed the transfer notices, take steps to manage your loan payments with the new servicer. If you have automatic payments set up through your bank or the old servicer, update these arrangements to direct payments to the new company. If you pay online, you will need to set up a new account on the new servicer’s website. Verify the new mailing address for payments if you send them by mail.
Federal law provides a 60-day grace period following a mortgage transfer. During this period, if you mistakenly send your mortgage payment to the old servicer, the new servicer cannot charge you a late fee, treat the payment as late, or report it negatively to credit bureaus. To ensure the legitimacy of the new servicer, cross-reference the information provided in the transfer notices with their official website.
Regarding escrow accounts, the new servicer will take over the management of your existing escrow balance. They will conduct their own escrow analysis, which may result in adjustments to your monthly escrow payment amount. These adjustments reflect the new servicer’s calculation of your property taxes and insurance premiums, ensuring adequate funds are collected. Any funds held in your escrow account by the previous servicer will be transferred to the new servicer.
Borrower Protections
Borrowers have specific legal protections when their mortgage loan is transferred. Consumer protection laws ensure servicers follow strict guidelines regarding notifications and payment processing during a transfer. The 60-day grace period prevents penalties for misdirected payments, allowing time to adjust payment methods without financial repercussions.
If you encounter errors or disputes with your new servicer, communicate your concerns in writing. Sending a written notice of error or a request for information to your servicer can trigger specific response requirements under federal regulations. Maintain thorough records, including copies of all transfer notices, payment confirmations, and any correspondence with both the old and new servicers. This documentation can be helpful if issues arise. If problems persist and cannot be resolved directly with the servicer, seek assistance from government agencies or consumer protection bureaus that oversee financial institutions.