What Happens if My Mortgage Is Sold or My Servicer Changes?

Your loan terms do not change when your mortgage is sold or your servicer changes. If servicing moves, the old servicer generally must notify you at least 15 days before the transfer and the new servicer within 15 days after it, and for 60 days a payment that reaches the old servicer on time cannot be treated as late. If only the ownership of the loan changes, the new owner must notify you within 30 days, and you keep paying the same servicer.

Is a sale of your loan the same as a change of servicer?

No. Two different things can be sold, and each triggers its own notice:

• The loan itself. The owner (also called the holder or investor) is the company entitled to your payments, such as a bank, Fannie Mae, Freddie Mac, or a trust that holds loans for investors. A sale moves that right, and it does not by itself change where you send payments.
• The servicing rights. The servicer is the company that collects payments and runs your escrow account. When servicing moves, you start paying a new company.

One sale can do both, or only one. The difference between a servicer and a mortgage holder explains the two roles, and what loan servicing is covers the servicer's duties.

The new servicer's notice can come up to 30 days after the transfer when the old servicer's contract was ended for cause, the old servicer went bankrupt, or a bank regulator such as the FDIC took it over. A move between affiliated companies that leaves your payee, payment address, account number, and payment amount unchanged does not count as a transfer and needs no notice.

How does the 60-day payment protection work?

For 60 days starting on the transfer's effective date, a payment the old servicer receives on or before its due date, including any grace period in your loan documents, cannot be treated as late for any purpose. The new servicer cannot charge a late fee on it. The old servicer must either forward a payment it receives after the transfer to the new servicer or return it to you with the name of the correct recipient.

Example: servicing transfers on June 1. Your July 1 payment is due with a 15-day grace period, and you mail it to the old servicer, which receives it on July 10. That is inside both the grace period and the 60-day window that runs through July 30, so it counts as on time. An August payment sent to the old servicer gets no protection, because the window has closed. Once the payment reaches the right company, it must be credited as of the day received under the prompt payment crediting rule.

What should you check after a transfer?

1. Confirm the notices match. The old and new servicers' notices should name the same new company and the same dates. If you got only one notice, or none, call the old servicer at the number on a past statement before sending money anywhere new.
2. Update automatic payments. If your bank or credit union's bill pay sends your mortgage payment, the CFPB says you must tell the bank to pay the new servicer. If you used the old servicer's automatic draft, check the transfer notice or ask the new servicer whether the draft carries over before you set up a new one, so you neither miss a payment nor pay twice.
3. Watch your escrow account. The old servicer must send you a short-year escrow statement, which closes out its handling of your account, within 60 days after the transfer. If the new servicer changes your monthly escrow payment or its accounting method, it must send you a new escrow statement within 60 days. As long as your payment is no more than 30 days overdue, the servicer must pay your property taxes and insurance from escrow on time to avoid penalties. Ask the new servicer to confirm it has your next property tax and insurance due dates. How an escrow account works explains what the account pays and why the payment changes.
4. Check that your homeowners insurance stays paid. If your premium is paid from escrow, the servicer generally must keep paying it, even by advancing money when the escrow account is short, rather than buy a replacement policy. If you pay the premium yourself and coverage lapses, the servicer can charge you for force-placed insurance, a policy it chooses, only after a first written notice at least 45 days before the charge and a reminder sent at least 30 days after the first and at least 15 days before the charge. Within 15 days after the servicer receives proof of coverage that meets your loan's insurance requirements, it must cancel that policy and refund charges for any overlap.
5. Follow up on any pending loss mitigation request. If you had a loan modification or other loss mitigation application open, you keep the same protections after the transfer. If the application was complete and reached the old servicer more than 37 days before any scheduled foreclosure sale, the new servicer generally must evaluate it within 30 days of the date it starts accepting your payments, and it must try to get missing documents from the old servicer before asking you for them. Rules for servicers dealing with delinquent borrowers covers your rights during that process.
6. Read your first statement from the new servicer. Check that your last payments to the old servicer, your principal balance, and your escrow balance carried over.

What if something goes wrong in the transfer?

The CFPB suggests sending both the old and the new servicer a written information request or notice of error if you never received a transfer notice, your payments are not being applied correctly, or the new servicer is not handling a loss mitigation application you filed with the old one. A servicer that fails to send accurate information to the new servicer has made an error you can dispute in writing.

Send each notice to the address that servicer designates for errors, if it has one, and include your name, loan number, and the problem. Each servicer must acknowledge a notice of error within 5 business days and fix the error or explain in writing why there was none, generally within 30 business days. For 60 days after receiving the notice, it cannot report adverse information about the disputed payment to the credit bureaus. Rules for written communication with servicers covers the response deadlines in more detail.