By law,
lenders are required to tell you within three
business days if they expect someone else to be
servicing your mortgage once you close the deal.
Typically, the lender will be the one who
services the mortgage for the life of the loan,
but it can also be handled by a third party in
some cases. Whoever services your mortgage will
be the one you send payments to and contact if
you have any questions about the loan.
Keep all
records of your dealings with the mortgage
service provider in case the loan is sold.
Servicing involves collecting and processing
monthly mortgage payments and making escrow
payments until tax and insurance fees are paid
off. The lender or service provider is required
to inform you of how much of your proceeds from
the previous year went to principle, interest,
taxes, and insurance, and to let you know if any
adjustments are needed to cover tax and
insurance costs for the next year.
The service
provider is also responsible for dealing with
any problems that might arise with the loan and
will consult with you if your payments become
delinquent. In such instances, they may extend a
forbearance, which is a deferral of principle
and interest payments until you can resume
payments. In extreme cases where the loan
becomes seriously in default, foreclosure may be
necessary.
What if your
mortgage service is sold?
In some instances, your mortgage service may be
transferred or sold. By law, both your original
service and the new service must notify you of
the change in writing, and should include
details such as the date the transfer takes
effect, as well as the name, address, and phone
number of the new service. The terms and
conditions of your original mortgage should not
change, and you must be informed of any changes
to your homeowner's insurance. In addition, a 60
day grace period is typically allowed, during
which time you cannot be charged a late fee if
you mistakenly send your mortgage payment to the
old service. Contact the new service if you have
any disputes or if you believe there are any
mistakes in your mortgage statements, but
continue to make payments as scheduled,
otherwise they may be considered delinquent.
Federal law requires the new service to
investigate your claims and make any necessary
corrections within 60 days.
