What Happens When Your Mortgage Servicer Changes?

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Norah Tanner, part of the Houzd Mortgage Team, is back to explain what to expect when your mortgage loan servicer changes. Let’s take a look.

If you’ve received a notice that your mortgage servicer is changing, you might be wondering what that means for you and whether you should be concerned. While the change may feel sudden, it’s a common occurrence in the mortgage industry. Still, it’s important to understand what a servicer does and how a transfer can impact you as a borrower.

Here’s what you need to know when your mortgage servicing is transferred to a new company.

What Is a Mortgage Servicer?

A mortgage servicer is the company that manages your loan after it’s closed. They don’t necessarily own the loan (your lender might have sold it), but they’re responsible for:

  • Collecting your monthly payments

  • Managing your escrow account (for taxes and insurance)

  • Handling payment questions or concerns

  • Sending statements and tax documents

  • Managing delinquencies or loss mitigation, if needed

The servicer is your main point of contact for anything related to your mortgage after closing.

Why Do Servicers Change?

There are several reasons your mortgage may be transferred to a different servicer:

  • The lender sells the servicing rights as part of their business operations

  • The loan is bundled into a mortgage-backed security

  • The lender or investor partners with a different company for better efficiency

These transfers are common and do not affect the original terms of your loan. Your interest rate, loan balance, and monthly payment amount remain unchanged.

How Are Borrowers Notified?

Federal law requires that you receive written notice of the servicing transfer:

  • A “goodbye letter” from your current servicer at least 15 days before the transfer

  • A “welcome letter” from your new servicer within 15 days after the transfer

These notices will include the date of the transfer, your new servicer’s contact information, and instructions for how to make your payments moving forward.

How a Servicing Transfer Can Affect You

Even though the loan terms stay the same, a transfer can temporarily impact how you manage your mortgage:

1. Payment Processing Delays

During the transition, payments might be delayed or posted late, especially if made close to the transfer date. Fortunately, there’s typically a 60-day grace period where you can’t be charged late fees due to a misdirected payment.

2. New Online Account Setup

You’ll likely need to create a new online account and re-enroll in autopay or bill pay. These settings don’t always carry over automatically, so it’s important to set them up with the new servicer.

3. Escrow Account Transfer

If you have an escrow account for taxes and insurance, your escrow balance will transfer to the new servicer. This process can take a billing cycle or two, so it's worth monitoring your escrow activity and confirming that payments are made on time.

4. Customer Service Differences

Every servicer has different customer service standards, online tools, and response times. You may notice a difference in service, which could be better or not. Either way, it’s important to familiarize yourself with the new company’s systems.

What You Should Do

Here are a few steps to ensure a smooth transition:

  • Read all communication carefully, especially the transfer notices

  • Confirm your new payment address or online portal

  • Monitor your account and payment history during the first couple of months

  • Set up new autopay or bill pay if needed

  • Save records of your payments and correspondence

Final Thoughts

A change in your mortgage servicer is typically a routine part of homeownership. The most important thing you can do is stay informed, double-check all instructions, and reach out if anything seems unclear. With a little attention during the transition, you can avoid surprises and ensure your mortgage remains in good standing.