The mortgage meltdown of a few years ago made many mortgage holders fear even the smallest changes. One change in particular is directly correlated to the company that is servicing a respective loan. Subsequently, your original mortgage holder has the right to sell your loan at any time. When this happens, it creates a certain amount of confusion on behalf of the borrower. Depending on who the lender is, it may be an uneasy couple of weeks trying to track down the mortgage. In the past, mortgages were bought and sold all of the time. It was very difficult to track down exactly who held the mortgage and with what terms. While recent changes in the law have made this process bearable, it can still be an unnerving process. Take comfort in knowing, however, that there is no need to fear. If your loan is sold, everything will be fine.
Unfortunately, the mortgage market meltdown was only compounded by the loss of lenders. At the height of the market, there were hundreds of lenders willing to throw their hat in the ring to attract business. In a relatively short period of time, niche products went by the wayside and only a few core lenders were left standing. The ones that are still around engage in the buying and selling of loans all the time. If a lender is short on cash and needs to recoup funds, selling a loan is one of their many options. In some cases, this process can take place inside the same company. Essentially, this means that a new service company is buying your loan as it was sold to you originally. The only difference is who you write your check out to every month.
Unfortunately, this process is not as clear cut as it may appear. Confusion may arise when you try to make a payment with the old lender when that loan has been sold to a new one. The standard procedure is for the old lender to send you an exit letter stating who the new lender is and the new lender to send you a welcome letter. However, these letters have been known to cross in the mail or they take weeks to get to you. They way in which you pay your mortgage can change over night. More importantly, you may not even be paying the right lender if you did not receive word in time. This should be considered nothing more than a slight inconvenience.
The terms of your mortgage agreement are protected by law. Despite the loan transfer, you will have all of the same terms, rates and payments that you originally agreed upon. You probably didn’t notice with the stack of paperwork at the closing, but one of those documents was a form that stated your loan can be sold at any time. That same document declares that the new lender/servicer must honor the terms set forth. The truth is that this process happens quite often in the mortgage servicing industry. Most of the time, the process goes smoothly and you are given more than 30 days’ notice, but there are times when you have to stop payment on a check or have less than a week to make a payment with the new lender. If you find yourself in an unexpected scenario, it is important to keep any documentation you receive and try to make a log of who you spoke with at each lender. This might be the only thing from removing a late payment on your credit report.
Mortgages get sold all the time and it can be a pain for consumers. If your mortgage is sold, establish contact with the new lender as soon as possible. Within a few months you will not even know the difference.
