Know Your Mortgaging Servicing Rights

A lender will typically sell their mortgaging servicing rights to a servicing company that will take over the collection of monthly mortgage payments. The lender may still maintain ownership of the mortgage, as the payments are forwarded to them, however will no longer be responsible for the administrative burden. This can create confusion for a homeowner since often times they will assume the lender is collecting their monthly payments, not a servicing company. Even though you have no control over who owns your mortgage’s servicing rights, it’s important to know your own rights as a consumer in doing business with a servicing company.

Transfer of Loan Servicing

In the event that your lender decides to sell their servicing rights to another servicer, a written notice must be sent 15 days prior to the transfer. The new servicing company must also issue a notice announcing the transfer within 15 days after the effective date. It’s important that both notices are received to prevent fraudulent claims that a new servicer has taken over the collection of your mortgage payments, when this is not the case. There’s a very little chance of recovering your missing money. Both service transfer notices must contain:

  • The name and address of the new servicer.
  • The date the current servicer will no longer accept payment.
  • The date the new servicer will begin accepting payment.
  • The new servicer’s phone number.
  • What optional insurances can be maintained, what to do to maintain the coverage and if the terms of the insurance have changed.
  • A statement that acknowledges that the transfer of the service does not change the conditions of the loan with the exception to those directly related to the servicing.
  • A statement explaining your rights, and their complaint resolution process.

The new servicer must allow a 60 day grace period after the transfer in which you cannot be charged a late fee for any mistaken payments that may have been sent to the prior servicer. 

Escrow Account

If your servicer has established an escrow account on your behalf for property taxes and homeowner’s insurance, federal law requires that they make these payments on time. Within 45 days of opening the account they must provide you with a detailed statement of your estimated tax payments, insurance payments and the due dates for the year. They are also required to give an annual free statement detailing the activities of your escrow account

Posting Payments

The servicer must post a payment to your account the day it is received. It is important you keep a detailed record of your payments. Should you receive a late fee, although timely payment was made, notify the servicer in writing and include documentation such as a cancelled check or your bank account statement. Be sure to keep a copy of correspondences you send and receive. Continue to make your mortgage payments on time. 

Fees

Your billing statement should provide an itemized list of fees the servicer has charged you. These are the fees you have authorized or the fees that were laid out in your mortgage agreement.

Payoff Statement

You can request a payoff statement that gives you the amount of money needed to payoff the loan. Generally, the servicer must provide you this document within a reasonable amount of time.

Disputes

Under federal law, your mortgage servicer must acknowledge a written request within 20 business days of receipt. A determination letter must be sent within 60 days detailing the actions taken to correct a dispute and must include a contact name and phone number.

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