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Lender Sold Your Mortgage? Here's What You Should Know

Hearing that your mortgage has been sold can be stressful, but don't worry too much. Lenders sell mortgages all the time.

Mortgage Sold

Have you ever taken out a loan from a mortgage company or bank only to find out a few months down the road that it’s been sold?

Don’t be surprised if this happens to you -- multiple times -- because it’s common that lenders sell mortgages.

Federal banking laws allow financial institutions to sell mortgages or transfer the servicing rights to other institutions.

Consumer consent is not required when lenders sell mortgages.

It might seem alarming because a mortgage is something very personal to a consumer, a symbol of your home ownership.

But banks and other financial institutions view your mortgage differently.

To them, your mortgage is just another financial asset. And that means lenders handle your home loan much more differently than you might.

Questions might be swirling around in your head. Why is your servicer allowed to do this? What does it mean for you? Are the terms of your mortgage going to change?

Don’t panic if you discover that your mortgage now belongs to another institution. Remember: a loan is a loan no matter who owns it.

Your interest rate, payment amount, type of loan (fixed rate or ARM), etc. cannot change just because your loan has been sold.

The only thing that’s changing is the address you’re sending your payments to.

To help put your mind at ease, here are answers to all of the questions you might have about your lender selling your mortgage:

Why do lenders sell mortgages?

There are basically two main reasons why a lender might sell your mortgage.

1. To gain capital

When a loan gets sold, the lender has basically sold servicing rights to the loan, which clears up credit lines and enables the lender to lend money to the other borrowers.

Much as we might think that financial institutions have countless amounts of cash on hand, the truth is that lenders needs to keep a large enough pool of money on hand in order to lend to other people.

Let’s say the bank is lending you $200,000 to buy a home.

Most mortgages last for 15 or 30 years -- and you’re certainly not the only person taking out a mortgage.

The bank would need to have billions of dollars in cash to issue loans to everybody.

That’s one of the main reasons why it sells loans like yours.

2. To make money

Lenders can make money by charging fees when the loan originates, earning interest from your monthly payments, and selling it for commission.

Administering a loan has value because it earns the mortgage servicer money -- a small percentage of the interest rate you pay will go to the servicer.

Is your mortgage being sold a bad thing?

In most cases, no. Unless you are delinquent or behind on payments, the terms of your loan will not change because you’ve already borrowed the money and signed off on it.

What rights do I have?

The most important thing to take note of is that your lender must provide you with a loan ownership transfer notice when your mortgage is sold.

The new owner of your loan must notify you within 30 days of the effective date of transfer.

Included in this notice should be the following information:

  • The new owner’s name
  • Address and telephone number of new owner
  • The person who can resolve issues concerning your loan payments or any right to rescind the loan (if different from new owner)
  • Date of transfer
  • Whether the transfer of ownership is recorded in public records.

Do the terms of your mortgage change?

The short answer is: no. The new servicer of your loan is legally not allowed to change the terms of your previous loan.

This means that things like your interest rate, life of your loan, and payment date must remain the same, even under the new lender.

In regards to the escrow in your home, the new servicer will reevaluate your loan to determine if a sufficient amount of money is being collected each month.

If your escrow, as well as your monthly payments towards property taxes, mortgage insurance, and/or hazard insurance are deemed insufficient, it's possible the new servicer of your loan could increase your monthly payment.

It's also important to note that your new mortgage servicer cannot force you to establish an escrow account, if it was previously stated that you were contractually able to pay taxes and insurance on your own under your former loan.

However, if this stipulation was not specifically stated in your previous mortgage contract, or was just never discussed between you and your previous lender,then it's very possible (and legal) that your new servicer can require you to establish an escrow account with them.

How come I didn’t know this transfer might happen?

Did you read your contract? Really? It’s mandatory for lenders to disclose whether your loan will be sold and the percentage of loans it sells.

Better dig out that mortgage contract again.

What should I do once I hear from my new servicer?

You’ll want to read the first mortgage statement you receive from your new lender carefully -- verify that all the information it lists is true and accurate.

If you’re in the middle of applying for a loan modification, you may have to begin the process all over again.

Note that dealing with a new company for your mortgage means that you may have to fill out paperwork that might look different, talk with new staff, and send your payments to a new address.

Don't be afraid to reach out to your new servicer if you have questions.

What if I run into a legal issue?

“Consumers should not be collateral damage in the mortgage servicing transfer process,” said Consumer Financial Protection Bureau Director Richard Cordray.

Mortgage companies have a legal obligation to protect consumers during loan transfers between mortgage servicers.

That means paperwork should not be lost, servicers should not lose track of a homeowner’s loss mitigation plans, and they should not hinder a consumer’s chance to save his or her home from unnecessary foreclosure.

Understand that the process of transferring servicing rights is challenging logistically.

It might involve moving thousands of loan documents, which explains why issues arise.

If your payment is returned and your servicer notifies you that it’s no longer servicing your mortgage, know your rights.

You do not want to end up in a situation where you receive a notice in the mail stating that you’re late on a payment -- and then wonder confusingly why you were never notified that you needed to send your payment to a new servicer.

If you have a complaint or question about the transfer of your loan, you have a legal right to send a written request or note to your previous lender.

By law, your lender is required to respond in 20 business days within receiving your letter, and in 60 business days, must either correct the addressed problem (and also give you notice that it has been corrected), or give you, the borrower, a written notice why the problem is not being corrected.

Either way if you need a problem corrected or are just requesting information, you will get a response from your lender -- it's the law that they do so.

Final thoughts

Understand that both your old and new servicers must notify you about the transfer of your servicing rights no less than 15 days before the effective date of transfer.

If you never received the servicing transfer notice, you can also file a complaint with the CFPB online. You should also consult an attorney.

Remember, receiving a notice that your mortgage has been sold should not be taken personally.

As long as you have been notified in a timely manner, your new servicer accurately lists your information, and you send in payments to the right address you should have nothing to worry about.

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Ask a Question

disqus_QfwJ8HdtqP
Thursday, 04 Mar 2021 11:59 AM
<p>I thought I'd post it in the general comments for anyone to see that needs help. I have had great success raising my credit score by using the "Tom Lawrence" service. I used to have debt and inquiries on my report until I came accross this genius whom my co worker revealed how he had helped many repair their credit. I contact him on tom.lawrence114 at g mail .com and explained to him how bad my credit is and how it had affected me drastically. He told me he would help me clear all debt, remove inquiries and increase my credit score to 800s and that was exactly what i got. I was able to get approved of a credit card without a hard pull, for capital one (2500), credit one (6000), and Key Jawlers (3000). What got me amaze was the high limit. I charged about $75 a month and paid them almost off by the end of the month. Every 45-60 days I requested a credit increase online.. My credit is now 805, all due to those three cards</p>
Saturday, 23 Jan 2021 12:31 AM
<p>My original mortgage lender did not require walls-in insurance for my condo and I did not have one (the condo is covered by a master policy). My mortgage was sold to PNC. PNC requires a walls in policy and they made me purchase one after my mortgage was sold to them which increased my mortgage expenses. Was this legal?</p>
Saturday, 15 Aug 2020 4:37 AM
<p>The 1st bank I used to purchase my home was Wells Fargo, they sold my house loan to a different bank and I was with that bank for 1 year and now the 2nd bank transferred my loan to another bank. The problem is the principal I owe is higher than the ending balance i had with the 1st bank. When they changed me to the 3rd bank I was caught up and now they say I owe 1 month. What should I do? I need guidance please.</p>
disqus_PAvWNt4SUR
Thursday, 30 Apr 2020 2:29 PM
<p>FILE WITH THE CFTC</p>
disqus_PAvWNt4SUR
Thursday, 30 Apr 2020 2:28 PM
<p>YES IT WILL TAKE 5 YEARS TO FORECLOSE</p>
disqus_PAvWNt4SUR
Thursday, 30 Apr 2020 2:27 PM
<p>IF YOU ARE SOLD TO A PURCHASER FOR A FEE, WHY DO THEY NOT NOTIFY WHO IT IS TOO?<br>ALSO, IF YOU REQUEST A FORGIVENESS OF A MORTGAGE BALANCE BECAUSE OF FRAUD AND VIOLATIONS OF THE OCC, WILL THE SERVICER BE THE FORGIVOR?</p>
MyBankTracker
Tuesday, 04 Jun 2019 10:18 PM
<p>The first step would be to find out where to send your payments so that there's not threat of foreclosure.</p><p>The next step would be to ask the lender to waive any late fees and delete any mentions of a late/missed payment from your credit reports.</p><p>If the lender denies this request, you may file a complaint with the CFPB: <a href="https://disq.us/url?url=https%3A%2F%2Fwww.consumerfinance.gov%2Fcomplaint%2F%3AYQ3VcmXNJMu6fIybEcdegBq-qhE&amp;cuid=15643" rel="nofollow noopener" title="https://www.consumerfinance.gov/complaint/">https://www.consumerfinance...</a></p><p>Finally, if the missed payments ends up putting your home at risk, seek professional legal advice.</p>
Monday, 03 Jun 2019 10:01 PM
<p>What happens if the new mortgage company does not contact you in writing where to send payments?</p>
MyBankTracker
Wednesday, 23 Jan 2019 5:14 AM
<p>If you were an affected customer and the lawsuit pertained to your loan, you receive notice on how to claim for any damages.</p>
MyBankTracker
Wednesday, 23 Jan 2019 5:13 AM
<p>Upon each change in loan servicer, you should be kept updated on where you should be sending the mortgage payments.</p>
MyBankTracker
Wednesday, 23 Jan 2019 5:12 AM
<p>If the loan servicer changed within 60 days of your "late" payment, late fees shouldn't be applied to your payments.</p><p>You should have received notice on the change of mortgage companies so that the mortgage payments go to the right place.</p><p>If you've contacted both companies and you couldn't come with a resolution with the payments, you can file a complaint with the Consumer Financial Protection Bureau to review your particular case: <a href="https://disq.us/url?url=https%3A%2F%2Fwww.consumerfinance.gov%2Fcomplaint%2F%3AYQ3VcmXNJMu6fIybEcdegBq-qhE&amp;cuid=15643" rel="nofollow noopener" title="https://www.consumerfinance.gov/complaint/">https://www.consumerfinance...</a></p>
phasevariance2
Saturday, 29 Dec 2018 5:52 PM
<p>it's criminal to give people 16 days notice. People should be allowed to weigh their options.</p>
Tuesday, 11 Dec 2018 12:59 PM
<p>Is it legal for the old mortgage company to keep the payments you were making even though they sold your mortgage too another bank. And than the new mortgage bank is saying you are late due too you were making payments to the old loan. Im trying to help my mother in law out. Thanks</p>
peter_simard
Saturday, 17 Nov 2018 5:40 PM
<p>They cannot not change the terms of the mortgage. When it is sold. Only you can if you refi. I would think that the old lender would have the a file of all your payments made to them and you should have the terms of your loan, hopefully in a safe place.</p>
disqus_tT7hqPI4jp
Sunday, 21 Oct 2018 3:58 PM
<p>What happens if a lender buys from a bank and then resells back to that same bank?</p>
Tuesday, 11 Sep 2018 5:19 AM
<p>What if your bank that sold your loan was Wells Fargo who just got sued for the selling of mortgages</p>
Thursday, 23 Aug 2018 12:03 AM
<p>My mortgage co sold my loan to another company . I had opitional life ins that they had included in my payments since my loan is being sold that will end but i payed 25 a month from 2009 untill now 2018. Can I get my money back since thete sell my loan to another company?</p>
xp84
Friday, 06 Jul 2018 10:54 PM
<p>dude, calm down. The person obviously had some misconceptions, but he was just asking a question. You could have chosen to reply calmly and inform him about how selling the loan is different than selling the house and not rudely. For example:</p><p>"Because your home is not being sold, just the right to collect your payments, you don't get a say in the transaction or any of the money that changed hands. Where you do stand to profit is if the value of your home rises, and you choose to sell it. In that case, 100% of the profit from the increase in home value will go to you."</p>
Thursday, 08 Mar 2018 11:20 PM
<p>Hang on. I don't know the specifics of Corey's objection, but my objection to this practice has nothing to do with the bank making money. It has to do with my right to chose who I do business with. For example, I avoid any sort of transaction involving B of A because I find their business practices and investment portfolio are not compatible with my values. If my lender wants to sell my mortgage, I should at least get to choose which lender. I think it's unreasonable to expect me to refi if I don't like the acquiring bank. Further, when a mortgage is sold, that imposes a litany of new administrivia on the borrower that was not part of the bargain when the loan was issued. E.g., re-registering an account online, signing up again for electronic delivery of documents, arranging again for accelerated pay-down plans, re-requesting to not sell my personal information, and connecting the new bank with any financial management tools.<br>The practice of selling loans is not consumer-friendly, and should involve choice and convenience that is not available under current practice.</p>
makfan
Tuesday, 02 May 2017 9:23 PM
<p>This just happened to me. I have been (and will continue to be) out of the country for a few weeks and if there was any notification, it is sitting in a pile at home. I saw a random email from a company I have never heard of that I actually thought was spam, but when I logged into my mortgage account it showed the transfer. Of course I already sent the payment to the old provider since I wouldn't be around when it was due.</p>
ranchdude
Tuesday, 03 Jan 2017 10:22 PM
<p>Your point is well taken, and for obvious reasons, however considering a person ends up paying back the mortgage company about twice the original amount of the loan (30 year, at today's interests rates) and further considering the lending laws having been structured so as to make sure the lender gets their interest payments mostly on the front end of the loan, then I think they make more than enough to pay their employees to service the loan.</p>
disqus_d37Tl7xdxA
Wednesday, 30 Nov 2016 11:47 PM
<p>Profits* Made*. Also, your HOME is not being sold. The mortgage note is being sold. Don't want banks making money off your loan? Pay cash for your house. OH WAIT, you probably can't afford to put that much cash down, so you NEED the loan. Crazy, so the bank shouldn't make money paying employees to service, process payments, pay salaries, benefits, overhead costs... NO of course not, all of that money should go to you, the person who didn't have the money in the first place. SMH. So SICK AND TIRED of people like you!</p>
Thursday, 18 Feb 2016 11:41 PM
<p>am I entitled to any of the prophets maid off my home being sold to another lender. </p>
SimonMBT
Friday, 06 Feb 2015 5:14 PM
<p>It is legal for lenders to sell their loans without consumer consent. The renewed mortgage term, however, should not have happened because the terms of the loan should remain the same.</p><p>You need to contact your new servicer to clarify the situation. It would probably help if you had documents for the approved mortgage and all past payments.</p><p>If they still won't correct the situation, you can file a complaint with the Consumer Financial Protection Bureau (CFPB) through the following link:</p><p><a href="http://disq.us/url?url=http%3A%2F%2Fwww.consumerfinance.gov%2Fcomplaint%2F%3AaQ5iYiJwVoKNx0hBvq7toqu2Bzw&amp;cuid=15643" rel="nofollow noopener" title="http://www.consumerfinance.gov/complaint/">http://www.consumerfinance....</a></p>
Friday, 06 Feb 2015 4:39 PM
<p>My bank sold my mortgage which I have been paying now for over 9 years. The new servicer changed the mortgage for 30 years as if this is a new mortgage. What happened to the 9 years I already paid? So, my payment is divided into the principal 70. and the interest 173.!! This is totally ridiculous. Is this legal.?? if not, what do I need to do?</p>
Sunday, 07 Dec 2014 7:28 PM
<p>This is so true. I am terribly concerned about my mortgage that has been sold to a NOT very reputable mortgage servicing company; Green Tree Servicing LLC. On the 16th of this month it is going to be transferred. In the article it states that both the seller and the buyer is supposed to notify you no less that 15 days before the transfer, however in my case, the buyer has not sent me anything yet, but CitiMortgage has. The reputation of Green Tree is horrifying, and by not hearing from them yet does really concern me greatly.</p>
disqus_KTIE0u9FBm
Friday, 01 Aug 2014 7:20 PM
<p>Yeah, we've come a long way since the local bank on the corner held its own loans and sat on them like a protective Mother Goose. Although loans are traded today as any other commodity, I think it's true that the farther away you get from the Mother Ship, the greater the likelihood there is for financial mayhem.</p>

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