Did you get a notice in the mail saying that your mortgage has been sold to another lender? What does it mean? What do you do next? We’ve got your answers here!
Why lenders sell mortgages
The reason is pretty simple. Lenders need money to loan money. Say a lender gives you $300,000 to buy a house. On the day you close, you give the seller that money. All of it. But you pay back the lender the $300,000 (plus interest) over 15 to 30 years.
The lender gives you a big pile of cash up front. You pay them back a little bit at a time over a long period of time.
If the lender had to wait 30 years to get their $300,000 back, it might take 30 years before they could make another $300,000 loan. Instead of waiting, lenders sell mortgages so that they can get cash to provide more loans and help more people buy homes. This is a common part of mortgage lending.
First, don’t panic
The terms of your mortgage won’t change. In fact, the terms of your mortgage can’t change just because it’s been sold. The amount you owe, your fixed interest rate, your monthly payment, the number of years you have left to pay – all these have to stay the same. What changes is the name you write on the check, and, possibly, where you send the check.
Keep in mind that if you have an adjustable rate mortgage, that rate is subject to change with the new lender just like it can change with the previous lender. Your escrow payments can also change. Escrow accounts make sure things like your property taxes and mortgage insurance get paid. If your taxes go up or your insurance goes down, your escrow payments will likely change, too.
Second, know you are protected
Your new lender will send you a letter within 30 days of the loan’s sale to notify you that the mortgage has been sold and to provide information regarding the lender’s payment policies. If your loan’s servicer will also change, both your current servicer and your new servicer will send you a notice providing payment and contact information within 15 days of the transfer. A servicing transfer can also happen regardless of whether your mortgage loan is sold, but the following still protections apply.
You’re protected from late fees and penalties for 60 days after the servicing transfer if you send an on-time payment to the old servicer instead of to the new servicer. During these 60 days, the old servicer has to forward the payment or return it to you with the name and address of the new servicer.
Finally, use our “peace of mind” checklist
To help you out with this transition, follow this checklist:
1. Make sure your lender actually sold your mortgage
Unfortunately, fraud can happen. So be suspicious if you get your sale “notice” via email or by telephone. As we said earlier, you should receive a letter. It can’t hurt to call your mortgage company to confirm the letter is, in fact, from them.
2. Make sure all the numbers on your old and new statements are correct
Compare your last mortgage statement from your previous lender/servicer to the first statement from the new lender/servicer and make sure everything is accurate. Check the loan balance, the last payment amount, and the date it was received. If you have an escrow account, look at those numbers.
3. Dispute any errors or problems – do it in writing
When you see something that looks wrong, contact your new lender in writing and do so as soon as possible.
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