Understanding Consumer Rights When Mortgage is Sold

You've just received a letter stating that your mortgage has been sold to a new lender. This can be a confusing and overwhelming experience, but it's essential to understand your consumer rights during this time.

The new lender is required to provide you with a notice of assignment, which must be done within 10 working days of the sale. This notice will include the name and contact details of the new lender.

You have the right to continue making payments to the old lender until you receive a notice of assignment from the new lender. However, you should start making payments to the new lender as soon as you receive this notice.

The new lender will be responsible for servicing your mortgage, and you should contact them with any questions or concerns you may have. They will also be responsible for sending you statements and updates on your account.

A mortgage sale can happen quietly, and you might not even know it's been sold unless you pay attention to your mail.

Mortgage lenders sell mortgages to private investors or government-sponsored enterprises to keep cash flow moving and make new loans to other borrowers.

This process can happen shortly after you sign a loan or years later, and your mortgage could go through several sales transactions during its life.

You'll need to know who holds your mortgage to request information or ask for a loan modification, so it's essential to find out who the new owner is.

Mortgage sales can be complex, but generally, your loan terms don't change, and you won't have to worry about your interest rate changing if you have a fixed-rate mortgage.

However, if you have an adjustable-rate mortgage, your interest rate could change with a mortgage sale, so it's crucial to keep an eye on your loan terms.

You have the right to know your rights when your mortgage is sold. Under the Real Estate Settlement Procedures Act (RESPA), your servicer must acknowledge your letter ("qualified written request") in writing within five business days of getting it.

You have a 60-day grace period after a transfer to a new servicer, which means you can't be charged a late fee if you send your on-time mortgage payment to the old servicer by mistake.

Here are the key steps your servicer must take:

If you receive a notice that your mortgage has been sold, don't obsess over it. The terms of the loan — your interest rate, monthly payment and remaining balance — will not change.

You have the right to keep an eye on your information during this transition. Here are some steps to take:

Your mortgage servicer plays a crucial role in managing your mortgage, so it's essential to understand who they are and how they operate.

The mortgage servicer is responsible for dealing with your monthly payments, communicating with borrowers, and managing escrow accounts and foreclosure proceedings.

You can find the contact information for your mortgage servicer on your mortgage statement. If you can't find your mortgage statement, you can look up information on the MERS website or call the MERS toll-free number 1-888-679-6377.

A mortgage servicer can have a sub-servicer to help out, but the main servicer is the one you'll be dealing with most of the time.

Here are the main parties involved in the mortgage servicing industry:

It's worth noting that your mortgage servicer might stay the same even if your mortgage changes hands, but this isn't always the case.

If your servicer made a mistake or charged you a fee you don't owe, correct it as soon as possible. Don't subtract the disputed amount from your mortgage payment, as some servicers will refuse to accept what they consider a "partial" payment.

Use a Sample Complaint Letter to write your request, including your account number and an explanation of why you think your account is incorrect. This is known as a "qualified written request."

Gather any documents that support your request, such as copies of your statements, coupon book, and paperwork showing that you made your payments. These can serve as proof of your payment history and your interactions with the servicer.

Send your letter and any supporting documents to the mortgage servicer's customer service address by certified mail, requesting a return receipt. This may be a different address from where you send your payments.

Keep a copy of your letter and the originals of the documents you sent.

You'll receive a notice when your mortgage is sold, but don't obsess over it - the terms of your loan won't change.

The notice will inform you if the mortgage servicer is changing, so it's essential to check all the data listed with the old servicer to ensure it's up to date.

If the servicer is changing, update your payment process by redirecting your ACH withdrawal or mailing a check to a new address.

Keep receipts of statements from the months surrounding the sale and transfer to a new owner, as this will prove you submitted payments on time in case of any confusion.

There's a 60-day grace period after servicing rights have been sold, so if you recently sent a payment to the previous mortgage owner, you're in the clear.

If anything is unclear, don't be afraid to reach out to the new servicer, whose information should be provided on the notice.

Here are the key steps to take when your mortgage is sold:

Mortgage servicers can make mistakes that have a major impact on homeowners. For example, they may fail to properly process monthly payments and promptly credit them to the account, which can lead to damage to your credit.

A mortgage servicer must credit your payment on the day it receives the funds, with certain exceptions. This is known as the prompt crediting rule.

Mortgage servicers may also fail to account for a grace period they provided and inaccurately report a payment as late or missing to credit bureaus. This can result in major damage to your credit.

They may improperly charge late fees to a homeowner, tack on inappropriate foreclosure costs, or impose other invalid fees related to a homeowner falling behind on payments or facing foreclosure. Even if the fee itself is legitimate, you may have grounds to challenge the amount of the fee if it is excessive.

Dual tracking is another type of problem, where the mortgage servicer is negotiating with the homeowner to modify their loan while also pursuing a foreclosure. This is often prohibited by state laws and restricted by federal law.

You have a right to know what's happening with your mortgage, and that's why you'll receive certain notices when it changes hands.

Mortgage owners are required to send a notice of transfer of ownership within 30 days of the sale. This notice must include the name, address, and telephone number of the new owner, the date the mortgage transfer took place, the location where the ownership is recorded, contact information for the person or company acting on behalf of the new owner, and other relevant information pertaining to your loan contract.

The notice of transfer of ownership must be sent by the new owner, who may also be called the assignee. It's your chance to review and understand the changes that have taken place with your mortgage.

Here's what you can expect to see in the notice of transfer of ownership:

You'll also receive a notice of servicing transfer if your mortgage servicer changes hands. This notice must be sent by your old servicer at least 15 days before the date the new servicer takes over, and by your new servicer within 15 days after they take over the account.