Mortgage Servicer Transfer Q&A
Tips for a Smooth Transition for Homeowners
Why did my home loan get moved from one bank to another?
What will change?
When will I be notified of the transfer of my loan?
I am being asked to sign new documents, is that normal?
Will my modification transfer to my new servicer?
Who should I contact with questions?
How do I know this is not a scam?
If I am delinquent, will the new bank work with me on a workout (modification, forbearance, etc.)?
What will happen to my escrow account?
What about insurance policies and taxes?
I have an “escrow shortage,” what does that mean?
Who sends my end of the year tax statement?
Will my loan ever transfer again?
- Read everything you receive in-full.
- Use a highlighter to identify important information on documents to make it easy to find.
- Keep everything your servicer sends you in a clearly labeled folder.
- Keep a contact log of the date/time you called, with whom you spoke, and what was discussed.
- Keep copies of everything you fill out and return to the servicers.
- Contact insurance companies (homeowners, life, disability, hazard, flood, etc.) & tax authority.
- When provided information by any entity, ask where/how you can obtain it in writing.
- Always keep your servicer updated on newly changed contact information.
A: Selling or transferring loans is very common in the mortgage industry. This means that a new lender/servicer will be taking payments, managing escrow accounts, notifying you of account changes, and handling communication with you. When you first get your loan, Federal law requires the lender to give you at closing a “Mortgage Servicing Disclosure Statement” which discloses whether the lender intends to service the loan or transfer it to another lender, so take a few moments and review that document.
A: The transfer of loan servicing does not affect or change the terms of your mortgage. The terms, such as annual loan type, payment due date and interest rate of your loan remain the same as with your prior servicer. Your loan number, however, will almost always change because it is a unique identifier for each company.
A: The Law requires your current servicer to provide you with at least 15 days of notice of the transfer date. The new servicer is also required to notify you and will send you a “Welcome Letter” or follow-up documents containing the new loan number and where to make your payments. It is wise to call the new servicer to confirm the transfer, loan number, address to submit payment, payment amount and payment due date.
A: No, there should not be anything new to sign in regards to your existing loan. Only if your loan is modified would you be required to sign new legal documents.
A: If your loan was permanently modified prior to the transfer to your new servicer, and all system changes were completed, the modification and terms will remain in effect. If you were in the process of a modification working on, but had not finalized it, your new servicer should receive the documents you submitted to the prior servicer; however that is not always the case. Once the documents are received, your new servicer will determine the correct status of your workout, but additional documentation may be required to finalize the decision on the modification. Be prepared to start over, however, as it is not uncommon that different servicers have different requirements and processes.
A: Before the transfer, you should contact your original servicer. After the transfer date, call your new servicer!
A: Receiving a Goodbye Letter from your previous servicer, paired with the Welcome Letter from your new servicer should bring you peace of mind. If you still have some concerns, call both servicers to discuss. If you are not familiar with the new servicer, research them on the Internet and/or ask your prior loan officer about the new company.
Q: If I am delinquent, will the new bank work with me on a workout (modification, forbearance, etc.)?
A: Each servicer or bank has their own set of standards and requirements for qualifying for a workout option.
A: Most servicers perform an analysis of your escrow account within sixty (60) days of transfer during which time they review your escrow payment amount and determine if it is adequate to cover taxes, insurance, and other premiums paid through escrow. Your new servicer should send you an “Escrow Analysis Statement” via mail which identifies the payment change, if any.
A: If you have an escrow account and if both your taxes and insurance are included in your total monthly mortgage payment, it is your prior servicer’s responsibility to inform the insurance company and your tax authority of the change in servicing entity. If you receive a notice that either taxes or insurance are past due, call your new servicer to ensure that funds are being escrowed for those premiums.
If you pay taxes and insurances directly, all of your information should remain the same and you should continue to make your payments on time.
A: An escrow shortage occurs when the funds in your escrow account at the time it is analyzed by the new servicer are less than what is needed to pay future tax and/or insurance payments. This will result in an escrow adjustment and you can learn more about this in your “Annual Escrow Account Disclosure Statement.”
A: Both the Goodbye Letter from the prior servicer and the Welcome Letter from the new servicer should inform you how they will be reporting your interest paid for income tax purposes at year end. Most often, both lenders will report for the time period they serviced the loan. Your old servicer may send the tax statement to you shortly after the transfer date, so keep on the lookout for this document and hold onto it until you prepare your annual taxes. The new servicer will provide a tax statement by the normal IRS due dates.
A: There is a possibility that your servicer will transfer your loan again. The transfer or sale of your loan has nothing to do with the quality of your loan or payment history, nor does it reflect any identifying factor you possess.
A: Consumers having problems with their mortgages can call the Consumer Financial Protection Bureau (CFPB) toll-free 855-411-2372.
Homeowners can also submit mortgage-related complaints on the CFPB website at consumerfinance.gov.