Mortgage Sold? Your Rights When Lenders Transfer Loans

In a Nutshell: Your lender can sell your mortgage at any time. You have the right to proper notification within 30 days. The sale won’t change your interest rate or loan terms. You need to know who owns your loan and who services it. Payment mistakes during transfers can hurt your credit score.

Understanding the Key Players in Mortgage Sales

Three main parties are involved in mortgage sales. You need to know who they are and what they do.

Struggling With Mortgage Payments After Your Transfer?

If your mortgage was sold and you're having trouble keeping up with payments, Cambridge Credit Counseling can help you create a lower payment plan. Get free credit counseling today.

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What Is a Mortgage Lender?

Your mortgage lender owns your loan. They’re also called your creditor or mortgage owner.

The lender could be the original company that gave you the loan. Or it could be a company that bought your mortgage later.

You can find out who owns your mortgage by contacting your servicer. Check the servicer’s website or call them directly.

What Is a Mortgage Servicer?

Your mortgage servicer manages your loan day to day. They handle your monthly payments and communicate with you.

The servicer manages your escrow account. They also handle foreclosure proceedings if necessary.

Your lender can service its own loans. But most lenders hire separate servicers to manage their mortgages.

Your servicer might stay the same even when your mortgage is sold. Sometimes servicers hire sub-servicers to help with the work.

How Do You Know Who Your Mortgage Servicer Is?

Your mortgage statement shows your servicer’s contact information. Can’t find your statement? Visit the Mortgage Electronic Registration System (MERS) website.

You can also call MERS at 1-888-679-6377. MERS tracks mortgages and servicers across the country.

What Is an Investor?

Investors buy mortgages from lenders. Freddie Mac and Fannie Mae are the most well-known mortgage investors.

These organizations purchase loans to free up capital. This allows lenders to make new loans to other borrowers.

Investors don’t manage your loan account. They hire servicers to collect payments and manage escrow accounts.

Investors focus on financial returns from interest and fees. They want to earn money from your mortgage over time.

Why Do Lenders Sell or Transfer Mortgages?

Lenders profit from the interest you pay. But collecting that interest takes 10 to 30 years or more.

Selling mortgages gives lenders immediate cash. They sell to private investors or government-sponsored enterprises (GSEs).

The two most common GSEs are:

Freddie Mac (Federal Home Loan Mortgage Corporation)
Fannie Mae (Federal National Mortgage Association)

When your mortgage is sold, the lender receives cash or bonds. Our partner Cambridge Credit Counseling can help if you’re struggling with your mortgage payments after a transfer.

The lender uses that money to make loans to other borrowers. The cycle continues constantly in the mortgage industry.

When Will Your Mortgage Be Sold?

Your mortgage might never be sold. Or it could be sold multiple times during your loan term.

A sale can happen shortly after you sign your loan. It could also happen several years later.

There’s no way to predict if or when your mortgage will be sold.

Does a Mortgage Sale Affect Your Loan Terms?

Your loan terms stay the same when your mortgage is sold. Federal law protects you from changes to your agreement.

Fixed interest rates never change because of a sale. Adjustable-rate mortgages (ARMs) can change based on the terms you agreed to.

But ARM changes aren’t caused by the sale itself. Your rate adjusts according to your original loan contract.

What Steps Do You Need To Take After a Mortgage Transfer?

Read all notices you receive in the mail. Your notices will tell you who owns your mortgage now.

You’ll also learn which company will service your loan. Save these notices for your records.

You need to know who holds your mortgage for several reasons. You’ll contact them to request information or ask for a loan modification.

Send your mortgage payments to the new servicer immediately. Don’t wait or assume your old servicer will forward payments.

Your old servicer is required to forward payments. But mistakes happen and you could face late fees.

Payment errors can hurt your credit score. Stay organized and proactive to avoid problems.

Contact your new servicer immediately if something seems wrong. Missing payments or statement errors need quick resolution.

What Are Your Rights When a Mortgage Is Sold or Transferred?

Federal laws protect you when your mortgage changes hands. You have the right to receive important notices.

You also get time to adjust during the transition. The Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act provide these protections.

Two main protections guard your interests: the notice of transfer and the 60-day grace period.

Notice Requirements

Your new mortgage owner must notify you within 30 days of the transfer. Federal law (15 U.S. Code § 1641) requires this notice.

The transfer notice includes:

The new owner’s name, address, and phone number
The date the ownership transfer took place
Where the ownership is officially recorded
Contact information for the new owner’s representative
Other details related to your mortgage contract

You’ll receive separate notices if your servicer also changes. Your old servicer must notify you at least 15 days before the transfer.

Your new servicer must send notice within 15 days after taking over. Sometimes both servicers combine their notices into one letter.

A combined notice must still arrive at least 15 days before the transfer date.

60-Day Grace Period

Federal law gives you a 60-day grace period after the transfer. You won’t be penalized if payments are misdirected during this time.

The grace period protects you from confusion during the transition. You get time to adjust to the change.

If you accidentally send payment to your old servicer, you’re protected. Your new servicer can’t charge late fees during the grace period.

They also can’t report your payment as delinquent to credit bureaus. You’re protected even if you make an honest mistake.

What Should You Do if There’s an Issue With Your Mortgage Transfer?

Mortgage transfers sometimes have problems. Errors during the process can impact your payments and credit score.

You have tools and protections to resolve most issues quickly. Act fast when you notice a problem.

What To Do if a Payment Isn’t Credited Properly

Notify your new servicer and lender in writing immediately. Document everything with a paper trail.

Payment errors can lead to late fees. They can also damage your credit score if not fixed quickly.

File a complaint with the Consumer Financial Protection Bureau (CFPB) if the servicer doesn’t help. The CFPB holds mortgage companies accountable for following federal laws.

Your complaint can help resolve your issue. It may also highlight systemic problems with the company.

The CFPB can fine companies or stop them from collecting payments. They take consumer complaints seriously.

How To Ensure Forbearance and Foreclosure Records Are Accurate

Confirm that your new lender recorded your account details correctly. Double-check if you’re in forbearance or foreclosure.

These situations involve sensitive timelines and agreements. Errors during transfer can disrupt your arrangements.

Review your records carefully and verify the new servicer honors your original agreement. Contact an attorney immediately if foreclosure proceedings move forward in error.

Your home is at risk if records are wrong. Professional legal help protects your rights.

Double-Check Records for Refinances and Second Mortgages

Review your mortgage documents if you’re refinancing. Check your escrow account and payment history.

Everything should match perfectly. Small errors like incorrect balances can create big obstacles.

Misapplied payments can prevent you from refinancing. They can also cause problems managing multiple loans.

Contact your new servicer immediately if you notice discrepancies. Resolve issues before they become bigger problems.

Frequently Asked Questions

What is a mortgage servicer and how is it different from the lender?

Your mortgage servicer manages your loan day to day by collecting payments, managing your escrow account, and communicating with you. The lender (or mortgage owner) is the company that actually owns your loan. Many lenders hire separate companies to service their mortgages, so your servicer and lender are often different companies.

How do I know if my mortgage was sold?

You'll receive written notice in the mail within 30 days of the sale. The notice includes your new owner's name, address, phone number, and the transfer date. If your servicer also changes, you'll receive separate notices from both the old and new servicers at least 15 days before the transfer.

Can my interest rate change when my mortgage is sold?

No, your interest rate cannot change because your mortgage was sold. If you have a fixed-rate mortgage, your rate stays the same regardless of who owns the loan. Adjustable-rate mortgages can change based on your original loan terms, but the sale itself doesn't trigger a rate change.

What should I do if I accidentally sent payment to my old servicer?

Contact both your old and new servicers immediately to ensure the payment is forwarded correctly. During the 60-day grace period after the transfer, you're protected from late fees if you accidentally send payment to the wrong servicer. Document everything in writing to create a paper trail.

Can I prevent my lender from selling my mortgage?

No, you cannot prevent your lender from selling your mortgage. Federal law allows mortgage sales, and they're common in the lending industry. However, the sale cannot change your loan terms, interest rate, or any agreements you made when you originally signed your mortgage contract.

Your Rights When Your Mortgage Lender Sells Your Home Loan