Loan Servicing Transfers: What to Expect When Your Loan Changes Hands

A loan servicing transfer occurs when the company that manages your mortgage payments and handles your loan, known as the loan servicer, transfers the servicing rights to another company. While this transfer does not change the terms of your loan, it can impact where and how you make your mortgage payments. Understanding what to expect during a loan servicing transfer can help you avoid any confusion or missed payments.

When your loan is transferred to a new servicer, you will receive a notice of transfer from both your current servicer and the new servicer. This notice will provide important information, including the date the transfer takes effect and where you should send future payments. It’s crucial to carefully read this notice and make sure you have the correct information to avoid any payment delays.

One key protection for borrowers during a loan servicing transfer is the 60-day grace period. During this period, if you accidentally send a payment to your old servicer, they are required to forward it to the new servicer without charging you any late fees. This grace period helps ensure a smooth transition and protects you from penalties while you adjust to the new payment process.

It’s also important to review your new servicer’s payment options and ensure that your payment methods, such as automatic payments, are updated to reflect the change. Some servicers offer online portals, mobile apps, or other convenient ways to manage your mortgage payments, so it’s worth exploring these options with your new servicer.