One day you may get a letter in the mail that says your mortgage has been sold. Don’t panic. You haven’t done anything wrong. But there are some things to be aware of when dealing with a new lender.
Why Mortgages Are Sold
To a bank, your mortgage is just another financial asset. The decision to sell your mortgage had nothing to do with you.
“Lenders will often sell mortgages in order to free up capital for future lending,” said Sam Sharp, vice president of mortgage lending for the home loan company Guaranteed Rate.
Dealing With Your New Lender
If a lender sells your mortgage, the law requires that you be notified within 15 days of the sale. You should receive two letters, one from your old lender and one from your new lender. These letters should provide you with all the information you will need to communicate with the new lender, including where and how to make your payments. Be sure to send all future payments to the address the new lender gives you. A new lender does not have the right to change the terms of your mortgage, so your payment amount should not change.
The Grace Period
What if you send a payment to your old lender by mistake? Not to worry. One of the stipulations made under the Real Estate Settlement and Procedures Act, or RESPA, protects you against penalties for a limited amount of time after the mortgage transfer.
After your mortgage is sold, there is a 60-day grace period during which the new lender cannot charge a late fee on payment, if you mistakenly sent that payment to the old lender. This two-month grace period “protects the borrower in case there is any miscommunication or a delay in the notification,” Sharp said.
If you are late due to sending the payment to your old lender, the new lender may not report it to any credit agency. Your loan cannot be deemed delinquent during this grace period, either.
Look for Errors
Transferring your mortgage to a new company may sound like it’s an opportunity for errors. While Sharp says this generally doesn’t happen, to be safe, go over your mortgage statement from your new lender and compare it to your old one. In the event that something looks different or you spot a discrepancy, you should write a complaint letter to the new lender, disputing it. The U.S. Department of Housing and Urban Development has a sample of a qualified written request you may want to use as a model for yours. According to the law, the lender must respond to you within 20 business days, and if there is an issue needing resolution, act within 60 business days.
If for some reason the new lender is not responsive, Sharp says to “contact the previous loan servicer to report the issue.” If you’re really not getting anywhere, lodge a complaint with the Consumer Financial Protection Bureau. Companies are required to respond within 15 days to both you and the CFPB.
Keep in mind that your mortgage may be sold several times during your mortgage-paying period. Conversely, it may never be sold again. There’s no sure way of telling, but don’t let that worry you. Just keep making your monthly payments on your mortgage and you will be fine.