What if Your Mortgage is Sold?

About half of all mortgage loans are sold from one lender to another, usually because the first lender isn't equipped to collect payments, manage escrow accounts, pay taxes and insurance, respond to questions, and prepare payoff statements when the property is sold or refinanced. Some borrowers receive letters in the mail telling them about the sale of their loan a few days after closing, while others may not receive a notice for years.
In the mortgage industry, this is called a “transfer of servicing,” and is a common practice. Borrowers shouldn't be concerned about these changes, as the most lenders transfer their servicing rights. Generally, the selling of a loan from one lender to another is a smooth transition and doesn't impact the borrower....but every so often, there's a misstep by either the loan buyer or the loan seller.
Under the National Affordable Housing Act, when a mortgage loan is sold, the borrower is required to receive a “goodbye” letter from their current servicers at least 15 days before their next payment is due. The letter must state the name, address, and telephone number of the new servicer, the date the old company will stop collecting payments, and the date the new company will start accepting them. But under the 'Helping Families Save Their Homes Act', signed by President Obama on May 20, the new owner of the loan, which may or may not be the servicer, also must notify the borrower of the transfer within 30 days, known as the “hello” letter.
The “hello” letter should outline the same information as the “goodbye” letter sent from the former loan servicing company.
Borrowers should be cautious if they receive a “hello” letter without receiving a “goodbye” letter, as they may be the intended victim of a scam by someone who is hoping to unlawfully receive the monthly mortgage payments. Concerned borrowers should contact their current loan servicer to verify if their loan has been transferred. If it hasn’t, authorities should be notified immediately.
In most cases, a mortgage payment sent to the old servicer automatically will be forwarded to the new servicer for a brief amount of time, typically 60 days. However, if payments are not sent to the correct servicer, they could become lost, and the homeowner may incur late fees....and possibly credit prob ems.