Tuesday, March 26, 2024

Why Does My Mortgage Loan Keep Getting Transferred

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From the perspective of a borrower, the âsaleâ of your mortgage usually means that the servicing of your mortgage has transferred to a new company, meaning you will be sending your monthly payment to a new company. This can happen a couple different ways, depending on who you chose to work with on your mortgage. Mortgage originators are entities that work with borrowers to set up and conduct the mortgage transaction. Mortgage servicers handle the administrative duties of the mortgage such as collecting monthly payments or managing escrow accounts.

Many mortgage originators do not service loans and as a result sell your loan shortly after it funds to a mortgage servicer. However, some companies, such as Pennymac, both originate AND service mortgages so your loan remains with your originator after it funds and you retain the relationship with your lender .

It is also not uncommon for you mortgage to be âtransferredâ from one mortgage servicer to another. Mortgage servicers earn fees for servicing your account and from time to time mortgage servicers may decide to sell the rights to service your mortgage to another company.

Your consent is not required for the sale of your mortgage and your loan may be sold multiple times. However, it is required that all lenders disclose whether your loan will be sold, as well as the percentage of loans that they typically sell.

How A Transfer Of Mortgage Works

A buyer may want to take on an older mortgage because such a transfer could let them take advantage of previous interest rates that may have been lower than the current market rates. A transfer of the mortgage, if completed successfully without challenge or stipulations, would not change the terms or length of the loan, leaving just the remaining outstanding balance to be paid off. Through a transfer of the mortgage, a buyer might also avoid having to pay closingcosts that are associated with buying a home with a new mortgage.

Not all mortgages are eligible for transfer. If it is, the mortgage is said to be “assumable.” In order to transfer a mortgage, the mortgage lender will need to verify that the person or entity that will assume the loan has adequate income and credit history to be able to make payments in a timely manner.

If a borrower is not allowed to transfer a mortgage, due to the loan’s underwriting, they may need to explore other options to avoid foreclosure. For example, they could work with their lender to see if it is possible to add another borrower/owner to the mortgage, which would enable him/her to make payments toward the unpaid loan balance. Or they could sell the home and have a potential buyer, colleague, family member, or another entity agree to make up any difference between the home’s sale price and the unpaid loan balance.

What Can Borrowers Do If Their Mortgage Is Sold Or Transferred

If your mortgage is sold to a new servicer, there isnt a whole lot you can do about it. But again, experts say there isnt necessarily a whole lot that homeowners should want to do about it, as not much should change from the homeowners perspective.

The process of having a mortgage sold is fairly streamlined and mostly takes place behind the scenes between the originator and the new servicer, or from one servicer to another. Homeowners need to wait for contact from the new servicer in order to verify that all of the information related to their home and outstanding balance is correct, and that to learn where they need to send payments going forward.

For homeowners anxious about not hearing from a new service provider? Rueth says not to sweat it those companies are now bondholders, and theyll want to make sure they get their money. Theyll call you, she says.

The streamlined process that is, being notified by both your originator and new servicer that your mortgage is changing hands is mostly due to regulations and rules put into place by the Dodd-Frank Act following the financial crisis more than a decade ago.

Once a mortgage is sold, though, homeowners should change their payments to make sure theyre going to the new servicer. If they accidentally pay the old servicer or originator, Rueth says that the originator should forward the payment to the new servicer until everything is sorted out. It cant hurt to call the new and old servicer to make sure.

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Some Features Might Disappear

If youve consolidated your loans with another company, you might lose some enticing features, like automatic biweekly payments instead of monthly payments.

If you set up something similar with your new servicer, specify where you want your extra payment to be going. Some servicers might not automatically put it toward interest.

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Why Was My Mortgage Sold

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It’s common for lenders to sell home loans to another company, including Freddie Mac. This practice allows lenders to make more home loans. If you received a letter titled “Borrower Notification: Freddie Mac Has Purchased Your Mortgage Loan,” dont be alarmed. The letter is for informational purposes only, and you do not need to take action.

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Confirm Your Loan Balance And Account Information

If youre looking to refinance or pay off your loan balance before the end of the loan term, youll need to confirm the payoff amount with the servicer. The payoff amount is what you still owe on your loan. Its not the same as your current loan balance because the payoff amount includes the interest accrued up through the day you expect to pay off the loan, and any fees you havent yet paid. Call your servicer to get your payoff amount as of a specific date.

Before you decide to pay off your mortgage, consider these questions.

1. Will you owe a prepayment penalty? Check your monthly billing statement, coupon book, or the paperwork you signed at the loan closing to see whether youll owe a prepayment penalty if you pay your loan back early. Usually, a penalty applies only if you pay off the entire loan .

2. Do you owe other money? It may make more sense to pay off other loans, credit cards, and car loans first especially if youre paying a higher interest rate on them.

3. Whats your situation? Decide whether it works in your favor to pay the loan early. Do you plan to stay in your home for the long term? Are you nearing retirement? Will there be tax implications to paying off your mortgage? Does any benefit offset having to pay a penalty?

What Happens When Your Mortgage Is Sold

When your mortgage is sold, a new company is typically buying the servicing rights. Those rights include collecting and processing the payments, along with all the additional regular duties that come with mortgages. Those duties may include making disbursements from an escrow account to taxing authorities and property insurers. There are some entities that specialize in taking care of those servicing obligations.

Prior to your mortgage being sold, youll receive a heads-up about the new servicer. Federal law dictates that you must receive a notice about the change at least 15 days prior to the switch. Then, within 30 days, the new owner of the mortgage is required to send you its name, address and contact number.

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There might be times when your finances arent where they need to be. That doesnt mean the world stops or your obligations cease to exist.You still have bills to pay, mouths to feed, and other expenses to cover. Your bank or credit union might turn you away, but a short term loan can get you there.Yet, when you research all of the 24/7 online payday loans in Canada has to offer, you will quickly find that not all of these platforms are created equal. Some have sky-high interest rates, complicated jargon, and miles of fine print.This is when we come in. Lets explore a few of the features that set our program apart from the rest.

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Loan servicers arent something youre able to select. If your lender is not also your mortgage servicer, it will choose the third party that will be handling servicing rights.

If you dont like your current loan servicer, there isnt much you can do. Its not possible to force your lender to choose another one. However, if you have a complaint against your loan servicer, you can contact it in an effort to have the problem resolved. Thanks to the Real Estate Settlement Procedures Act , your loan servicer has to acknowledge your request within 20 days and try to resolve it within 60 days. If they fail to do so, you may have the right to file a civil lawsuit if the service violates RESPA.

If all else fails, you can opt to refinance your loan in order to acquire a new mortgage servicer.

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Why Does My Mortgage Getting Sold Affect My Credit

A transfer or sale of your mortgage loan should not affect you. A lender cannot change the terms, balance or interest rate of the loan from those set forth in the documents you originally signed. The payment amount should not just change, either. And it should have no impact on your credit score, says Whitman.

Why Did My Mortgage Loan Get Sold

Its more or less the industry standard that a loan originator that is, the company that originally doled out a mortgage would sell it to a new company. A loan is originated, and a lender can keep it on their books or sell it to another party who consolidates it, Gumbinger says.

Companies make money originating loans, and theres further money to be made by servicing those loans. Some companies specialize in one or the other , and as a result, will focus their efforts on origination or servicing. The main purpose behind selling a mortgage to a servicer, though, is to ultimately securitize thembundle them up with other mortgages and sell them to investors, who earn a return from mortgage and interest payments.

Loans are passed around all the time because people are looking to tune their portfolios, Gumbinger says. has been around for decades the originate-to-sell model has become the dominant model in the industry.

As for what the actual process of having your mortgage sold looks like?

But assuming everything goes according to plan, homeowners will be notified that their mortgage has been sold, and then get another letter from the new servicer telling them where to send their future payments. In effect, homeowners really shouldnt need to do much other than send their payments to the new company.

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Why Banks Sell Loans They Make

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If you carefully selected your lender for a mortgage, a student loan or some other type of debt, you might be surprised or even upset to receive a letter telling you that the obligation is being sold to another financial institution.

Although theres nothing inherently bad about loans being sold the terms of the loan will not change you could run into problems if you fail to receive a notice or paperwork gets lost. That could cause you to miss payments, costing you late charges and even hurting your credit. Heres a look at why loans are sold and how you can protect yourself.

When A Mortgage Company Sells Your Loan

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Lenders and investors buy and sell mortgages all the time, usually without any problems. So how do you prevent mishaps if this occurs?

  • Lenders sell loans for many reasons, but your loan terms dont change
  • Your current lender must notify you of the change at least 30 days in advance
  • It will tell you where to send your payments and who to contact with questions
  • If you get a notice from a new servicer without notification from your current servicer, dont send any money. Contact your current servicer. Thats how you avoid fraud.

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    What Is A Mortgage Transfer

    A transfer of a mortgage is when a borrower re-assigns an existing home loan to another person or entity.

    In essence, this transfers all responsibilities associated with the mortgage and lien on the property to somebody new, explains Rene Segura, head of consumer lending for FBX, the banking division of Informa Financial Intelligence, based in Dallas.

    This transfer, or assignment, is usually only allowed when the mortgage is assumable, says Rajeh Saadeh, a Somerville, New Jersey-based real estate attorney. When transferring an assumable mortgage, the new borrower agrees to make all future payments at the original interest rate, and any legal obligations the original borrower has to the loan are typically severed.

    Mortgage Lenders And Mortgage Servicers Arent Necessarily The Same

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    Youve finally done it. You saved up for a down payment, made an offer on a home, and closed your loan with little hassle. A few months after you receive the keys, you get a letter in the mail: Your loan is being sold. Why? And what will happen for you when your mortgage is sold? Lets take a look at what occurs when your lender sells your loan, the role your servicer plays in the process, and the impact it will have on you.

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    How Do I Make My First Payment

    When you receive your Notice of Servicing Transfer letter from PNC in the mail, it will include instructions on how to make your first mortgage payment. When you make a payment during this transition the funds will be cleared from your funding account but the application of the payment to PNC might not be visible until all activity is reconciled.

    PNC offers many ways to make a payment, please review our payment options site for a list of ways you can make a payment.

    Payments made by phone can be accepted after your account transitions to PNC typically the 3rd business day after conversion.

    Note: During the 60-day period following the effective date of the transfer of loan servicing, no loan payment will be considered late, PNC will not impose a late fee, agent-assisted phone fee, nor will you receive any negative reporting to credit bureaus. After the 60-day period following the transfer of your loan, a fee may be assessed for agent-assisted payments made from a non-PNC account.

    I Mailed My Payment To My Old Servicer What Will Happen With My Payment

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    Your previous servicer will forward your payment to PNC for at least 60 days following the transfer of your loan servicing. This transfer may result in a delay in your payment posting to your account. You will not be assessed a late fee because of this delay. Please do not make an additional payment with PNC unless you have confirmed your previous payment has not cleared and you have placed a stop payment on the payment.

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    Mortgage Originators Vs Lenders Vs Servicers

    Mortgage Originator
    Helps you get a loan Finances your loan Manages your loan after closing
    Can work for a financial institution or independently Can be a bank, credit union, or other financial institution May or may not be your lender
    Paid to originate loan, either by commission or fees Earns money over the life of the loan via interest charges Charges your lender for servicing the loan

    Wait Seriously My Mortgage Was Sold What Are My Rights

    There are two components of your loan that may be owned:

  • The Mortgage Note

  • The Servicing Rights

  • The owners of the note and servicing rights do not have to be the same company. Thats right, the holder of your note may not be the person that you are paying monthly for your mortgage. Oy Vey!

    Do not fret government regulations require that you as the borrower receive notice whenever there is a transfer of either component.

    The Truth in Lending Act was amended in 2009 to require that borrowers be notified when their mortgage was sold, transferred, or assigned to a new creditor.

    The notice must be provided within 30 days of the sale, transfer, or assignment, and must include information about the new creditor, the date of transfer, how to reach a party having authority to act on behalf of the new creditor, and recordation of the debt.

    Furthermore, the Real Estate Settlement Procedures Act provides protection for you if your mortgage was sold.

    Under RESPA, your present loan servicer is required to notify you in writing of the assignment, sale, or transfer of servicing rights at least 15 days before the effective date of the transfer. The new servicer or holder of your mortgage must also send you this notice no later than 15 days after the effective date. The note of transfer must include the following information:

    Other items to keep in mind:

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    What Happens If The Company That I Send My Mortgage Payments To Changes

    The company that you send your monthly mortgage payments to is your mortgage servicer. Your servicer can change.

    Your mortgage servicer may transfer the mortgage servicing rights for your loan to another company to service your loan.

    If your mortgage servicing rights are transferred to a new servicer, you will need to start sending your monthly payments to the new servicer after a certain date. You will also need to direct any questions about your loan to the new servicer.

    You should be notified of the transfer before it happens

    Your old and new servicers generally must send you a notice telling you about the transfer of the servicing rights to your loan. Your old servicer generally should send this notice at least 15 days before your loans servicing rights are actually transferred to the new servicer. Your new servicer generally should send a notice to you within 15 days after the servicing rights for your loan are transferred, unless it was combined with the first notice. The notice should tell you:

    • The date on which your old servicer will stop accepting payments
    • The date on which your new servicer will begin to accept payments
    • The new servicers name and their contact information
    • The specific date the right to service your loan transferred to the new servicer

    Make sure to send your payments to the new servicer

    Issues related to servicing transfers

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