When you refinance or secure purchase mortgage financing on your new home chances are it will be sold to different mortgage companies over time.It is also important to verify that escrow payments are still accumulating. It is not unusual for the escrow payment to change slightly, but if your mortgage is being transferred within a couple months of the deadline for paying your annual or semi -annual real estate taxes, you should confirm with the lender that these will be paid ontime.
Mortgage companies most often must sell your loan to recover the capital to make new ones.
Here is a sample letter from HUD's website you can use to address complaints you may have about the servicing of your loan.
Attention Customer Service:
Subject: [Your loan number]
[Names on loan documents]
[Property and/or mailing address]
This is a "qualified written request" under Section 6 of the Real Estate Settlement Procedures Act (RESPA).
I am writing because:
* Describe the issue or the question you have and/or what action you believe the lender should take.
* Attach copies of any related written materials.
* Describe any conversations with customer service regarding the issue and to whom you spoke.
* Describe any previous steps you have taken or attempts to resolve the issue.
* List a day time telephone number in case a customer service representative wishes to contact you.
I understand that under Section 6 of RESPA you are required to acknowledge my request within 20 business days and must try to resolve the issue within 60 business days.
Sincerely,
[Your name]
The Real Estate Settlement Procedures Act (RESPA) is the Federal law that governs the rules for the servicing of your loan. This law is administered and enforced by the U.S. Department of Housing and Urban Development (HUD).
To preserve your rights under RESPA you may need to make a "qualified written request under Section 6 of RESPA" to the lender servicing your loan. Do not mail the letter with your payment. The mortgage servicer must respond within 60 business days of receiving your letter.
Conforming mortgages are more likely to be sold throughout the course of the loan terms than portfolio loans. Portfolio mortgages can still be sold, although rarely due to the fact that the secondary market for them are much smaller.
In fact, its this ability to continually create new business which facilitates the flow of loans and actually helps keep mortgage rates low.
Moreover, its important to note that there are actually two parts to a mortgage -- there?s the loan itself and then there?s the SERVICING of the loan -- and both can either be sold together or separately.
The servicing company is who you make your payments to. They also handle any escrow accounts and send out late payment and delinquency notices as needed. They also handle foreclosures when necessary.
If your mortgage is transferred to another company, you should receive a written notification from both the old company and the new company. The transfer of the loan will not change the rate, balance of the loan, payment amount, payment date, or any other terms of the loan.
Lenders will sell your mortgage for the loan amount plus a little extra. Then they take that money and provide a mortgage for another homeowner. Then they repeat the process again.
For a 60 day period following the transfer of your mortgage, the new servicer cannot report your payments sent to the former servicer as being late. This does not relieve you of the responsibility for the payments, but sending payments to the previous servicer is a frequent problem.
When you obtain a mortgage, your mortgage lender will have the right to sell or transfer your mortgage as they so choose. None of the original terms of the mortgage loan can change. The only thing that will be different is who you make your checks out to each month and where you send it. You will sign a servicing disclosure form at closing explaining the lenders guidelines on selling and transferring mortgages and how often they have done it on average, over the past 3 years.
When the holder of your mortgage changes, so will the mailing address for your payments. Lenders are required to notify you of the change but don't depend on them alone: any late payments will still be counted.
The fact that mortgages and their respective servicing can be sold allows for liquidity for mortgage bankers. Lenders can thus manage their loan portfolios and be more efficient. This efficiency leads to lower rates for the consumer. This is also why there are standardized documentation requirements for loans.
