Mortgage Servicing Transfer Explained

Introduction

A servicing transfer occurs when the right to collect your mortgage payments and manage your account moves from one company to another. Lenders often sell loans to investors, and servicing may be transferred as part of that process. Your loan terms do not change—only who you pay.

Why Servicing Transfers

Lenders originate loans and often sell them to investors (Fannie Mae, Freddie Mac, Ginnie Mae, or private investors) in the secondary market. When a loan is sold, the servicing rights may be transferred to a company that specializes in servicing. This is standard practice and allows lenders to free up capital to make more loans.

Your Rights Under CFPB Rules

The Consumer Financial Protection Bureau (CFPB) has rules that protect borrowers when servicing transfers:

• You must receive a notice from your current servicer at least 15 days before the transfer (or with the next statement)
• You must receive a notice from your new servicer within 15 days after the transfer
• You cannot be charged a fee for the transfer
• During a 60-day period after the transfer, the new servicer cannot report you late if you sent a timely payment to the old servicer

The notices must include the effective date, the new servicer's contact information, and information about your payment. See What Is a Mortgage Servicer?

What to Do When You Receive a Transfer Notice

Update any automatic payments, online bill pay, or recurring transfers to send payments to the new servicer. Do not send payments to the old servicer after the transfer date. Save the new servicer's phone number, address, and website. Set up an online account with the new servicer if they offer one.

Frequently Asked Questions

Why does servicing transfer?

Lenders often sell loans to investors (Fannie Mae, Freddie Mac, etc.) in the secondary market. When a loan is sold, the right to service it—collect payments, manage escrow—may be transferred to another company. This is common and does not affect your loan terms.

Do my loan terms change when servicing transfers?

No. Your interest rate, payment amount, due date, and other loan terms stay the same. Only the company you send payments to may change. You cannot be charged a fee for the transfer.

What notices will I receive?

Under CFPB rules, you must receive a notice from your current servicer at least 15 days before the transfer (or with the next statement), and a notice from your new servicer within 15 days after the transfer. The notices include the effective date and new servicer contact information.

What should I do when I receive a transfer notice?

Update any automatic payments or online bill pay to send payments to the new servicer. Do not send payments to the old servicer after the transfer date. Save the new servicer's contact information. During a 60-day period after the transfer, the new servicer cannot report you late if you sent a timely payment to the old servicer.