What happens if the company that I send my mortgage payments to changes? | Consumer Financial Protection Bureau (2024)

FAQs

What does it mean when your mortgage servicer changes? ›

Your servicer can change. Your mortgage servicer may transfer the mortgage servicing rights for your loan to another company to service your loan. If your mortgage servicing rights are transferred to a new servicer, you will need to start sending your monthly payments to the new servicer after a certain date.

Federal Regulation Z provides that no servicers shall fail to promptly credit payments received. If a payment is less than a full monthly payment, it may be held in a suspense account. Once the funds in the suspense account equal a monthly payment, those funds must be credited to the loan.

This very often happens if a loan payment is late. If this happens to your payments, you can still save your home. Many mortgage modifications are granted even after mortgage payments have been returned uncashed. Unfortunately, returned payments are often a sign that the bank is preparing to foreclose.

Occasionally, your mortgage payment may go up or down due to a property value reassessment. The frequency of property reappraisals can differ by location. It may happen once a year, every 2 years or only when a house changes owners.

Mortgage loan servicer changes can occur due to market conditions, business restructuring, and servicing agreements. Borrowers should be notified when their mortgage loan servicer changes and should follow the payment process outlined by the new servicer.

Errors in payoff balance—If you believe the servicer has made an error or failed to tell you the accurate amount to pay off your mortgage in full, the servicer must send a response no later than seven days after they receive your written notice of the error (excluding legal public holidays and weekends).

The suspense account is a catch-all account in which the borrower's money is stored until the loan servicing firm decides where to allocate the funds. The money in the suspense account can be moved to pay any or all of the following charges: property tax, homeowners' insurance, late fees, escrow, or elsewhere.

Poor communication, or a lack of responsiveness, is the most common complaint in the mortgage lending process. Both borrowers and referral partners, namely Realtors, want to know that the lines of communication are open when they have a question or need an update.

How to Resolve an Escrow Mistake. But even if the servicer is at fault, it's in your best interest to resolve any escrow errors immediately. If you have an escrow account as part of your mortgage loan and find out the servicer didn't pay the property taxes or homeowners' insurance, call your servicer immediately.

If you miss one mortgage payment, lenders will often issue you a 15-day grace period to pay without incurring a penalty. If you miss four consecutive mortgage payments (or are 120 days late), most lenders begin the process of foreclosure on your home.

Can you stop your mortgage from being sold? ›

As a homeowner, you typically cannot prevent your mortgage from being sold or transferred. The lender has the legal right to sell the mortgage to another entity, lender or investor, under federal law and under the terms of your loan contract (read the fine print).

Under the law, errors such as incorrectly applying or crediting payments, imposing unreasonable fees, and improperly starting a foreclosure sale may all be disputed.

The part of your fixed-rate mortgage payment that changes annually is your escrow. Each year, the financial institution that holds your mortgage estimates how much you'll pay in property taxes and home insurance. If your home value has risen since the prior year, the cost of your taxes and insurance will also increase.

When rates rise, there are fewer people who benefit from a new mortgage. Lenders and servicers adjust. Servicers looking to raise cash may make part or all of their portfolio available for sale to other servicers. Interested servicers may see this as an opportunity to grow their portfolio.

Why do loans get switched or transferred to a different servicer? Sometimes, we need to transfer loans from one servicer to another—for example, when a servicer's contract with us ends. Even if we transfer your loans to a new servicer, we (the U.S. Department of Education) still own your loans.

If you're happy with the offer, it's down to a conveyancer or solicitor to handle the legal work and draw up the contracts. You'll agree a completion date with your new lender and, on that date, they'll pay off your previous lender, complete the mortgage switch and become your new mortgage provider.

The trading of mortgage-backed securities in the secondary mortgage market allows for a continuous flow of funds in the housing and financing markets. While homeowners cannot prevent their mortgage from being sold, they have rights under RESPA to receive information about the transfer.