When your mortgage servicer changes

The notices you should get

Federal law, in the Real Estate Settlement Procedures Act at 12 U.S.C. 2605 and the CFPB's rule at 12 CFR 1024.33, requires notices when servicing moves. The CFPB summarizes the timing:

• Your old servicer generally should notify you at least 15 days before the transfer takes effect.
• Your new servicer generally should notify you within 15 days after the transfer.
• The two can send one combined notice instead.

The rule allows notice up to 30 days after the transfer in a few special situations, such as when the servicer is terminated for cause or goes into bankruptcy.

The notice should tell you the date the old servicer stops accepting payments, the date the new servicer starts, the new servicer's name and contact information, and the date servicing transfers. Under the rule, it must also tell you that the transfer does not affect the terms of your loan other than those directly related to servicing.

Some transfers between affiliated companies, where the payee, payment address and amount stay the same, do not require these notices.

Verify before you change anything

A letter telling you to send money somewhere new deserves a quick check. Before changing where you pay, call your current servicer at the number on your latest statement, not one in the letter, and confirm the transfer and the new company's name. Ideally, you will receive notices from both the old and new servicers.

The 60-day protection

The CFPB explains that for 60 days from the transfer date, the new servicer cannot charge a late fee or treat a payment as late if you sent it to your previous servicer on time or within the grace period. The old servicer should forward it or return it. This protects you during the switch, but it is not a reason to keep paying the old company.

Steps to protect your payments

1. Mark the dates. Note the last day the old servicer accepts payments and the first day the new servicer does. Allow extra time for mail.
2. Update autopay and bill pay. The CFPB points out that if your bank's online bill payment system pays your mortgage automatically, you need to change it to the new servicer yourself. If the old servicer drafted your account, check whether that stops and set up the new servicer's autopay.
3. Check escrow. Confirm your escrow balance, property tax and insurance information carried over. Missed tax or insurance payments after a transfer can be costly.
4. Read the first statement. Review the balance, payment amount, escrow and how your last payment was applied. The CFPB suggests carefully reviewing statements to confirm payments are credited accurately.
5. Keep records. Save the notices, your payment confirmations and any letters.

If something goes wrong

The CFPB suggests sending a written information request or notice of error if a transfer causes problems, and sending it to both the old and new servicers when the issue relates to the transfer. Federal servicing rules require servicers to acknowledge and respond to these written requests within set timeframes. If you cannot resolve it, you can submit a complaint to the CFPB.

The bottom line

Servicing transfers are routine and do not change your loan terms. Expect notices from the old and new servicers around the transfer date, verify them through your current servicer, update autopay, confirm your escrow carried over and use the 60-day late-fee protection as a safety net, not a plan. Put any problem in writing.