Transferring Your Loan

Even though you initially apply for a loan with a particular mortgage company, there is no guarantee you will always be served properly by that company. Sometimes the lender will transfer your services to another company. This means that another party will begin to collect your payments, manage your account and process your paperwork. This usually only happens when your lender is sold, and it can happen immediately following the closing of your mortgage or years down the road.

Selling or transferring loan service from one company to another is fairly common in the mortgage industry and it is perfectly legal. Your loan will most likely be sold along with a large bunch of other loans. It is rare for only one or a small number of loans be transferred.

The transference of loans can take place across cities, counties and even states. It can also happen more than once, being sold from one company to another and then still to another. The reason these companies sell or transfer loans is because it is cost-effective for them to originate loans and then sell them to another company. Opening loans is the key part of their business, and that way they make profit.

Don’t be upset about the transfer of your loan, as the quality of your loan will not change and your payments will remain the same. Remember that none of it is personal in any way, but simply a common business practice in the industry.

The company that holds your loan has the right to sell or transfer it to another company, and your permission is not necessary for them to do so. Although the lender does not need your approval, the mortgage company is obligated to informing you open the transfer of your loan. The transfer of your loan should not negatively affect your loan or the service you receive. All of the original terms and conditions of the loan should not change. The interest rate, duration and term of your loan also should not fluctuate.

The only thing that may change is tax or insurance rate, which may increase or decrease your escrow account. With adjustable-rate mortgages the original agreement should hold out with the new lender, but talk to your new mortgage company’s representative to make sure that you can still refinance at the time you planned on refinancing with your former company.

If your loan is transferred, you should be notified by a goodbye letter 5 to 15 days before your last fee from that company. The letter will inform you of your new service provider, the new company’s contact information, and where and when to send your upcoming payments.

Make sure to contact both your old and new service providers to confirm the transfer occurred and that your information is correct with your new company. Make copies of the goodbye and introductory letters with contact information and any documentation that may be legally relevant if ever needed.