You put a lot of time and effort into finding the right mortgage lender, but that lender may not service your loan. If you don’t ask your lender upfront, you may find out down the road that the lender gave your loan to a third-party loan servicer that you may or may not like.
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Unfortunately, you cannot change your mortgage servicer of your own free will. The only time you can change servicers is when the mortgage company themselves sells your loan.
Keep reading to learn what a mortgage servicer does and how it affects you when they change.
What’s a Mortgage Servicer?
The mortgage servicer is the company that sends you the mortgage statements, handles your payments, and manages your escrow account. You call the loan servicer when you have questions about your account. The loan servicer handles your escrow analysis and pays your real estate taxes and homeowner’s insurance for you.
Typically, the mortgage servicer isn’t the mortgage lender. The lender is the company you talked to when you applied for the loan. You dealt with a loan officer that walked you through the mortgage process and even came to your loan closing. Little did you know that would be the end of that relationship.
What if You Don’t Like the Mortgage Servicer?
Unfortunately, you don’t have a say in who services your mortgage loan. There aren’t any laws protecting your rights when choosing a loan servicer. If the mortgage company decides to sell your loan, they have the right to do so.
The law does require that the lender give you advance notice at least 15 days before your next due date. The letter informs you of the new mortgage servicer, their address, and the date you should start sending your payments to them.
After you receive the ‘goodbye’ letter, you’ll receive a ‘welcome’ letter from the new loan servicer providing you with the same information. Unfortunately, you don’t have the right to accept or deny the transfer; it is what it is.
What Changes when you have a New Mortgage Servicer?
Luckily, nothing changes on your loan when you have a new mortgage servicer. The new company cannot change the terms of your loan. The only thing that changes is where you send your payments or who you contact with questions or concerns.
You also get a 60-day grace period when your loan transfers. This gives you enough time to receive the required documents and get your payment sent to the right place. The 60-day grace period gives you time to get everything straight without worrying about a late fee or reported late payment.
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Your Other Options
If you really can’t stand your mortgage servicer for one reason or another, you have a few options:
- Refinance your loan – You can refinance your mortgage with another lender, but make sure you ask about who will service the loan. We don’t recommend refinancing just to change loan servicers, but if you can get a lower rate or you need to take cash out of your home’s equity, you can use the opportunity to refinance and change loan servicers.
- Communicate with the servicer – Communication is the key to success with any company. If you have a problem with the mortgage servicer, call or write them a letter. Let them know of your complaint in detail and see how they handle it. You may be surprised, especially if you get management involved.
- File a complaint – If you can’t get your issues resolved, you can file a complaint with HUD or the Consumer Financial Protection Bureau. Both organizations will address the issue with the servicer and try to resolve it for you.
Before you accept a loan, ask the lender who will service it. This will give you the opportunity to research the company and decide if it’s a company you want handling your loan. While there’s no guarantee that your loan will stay with that servicer for the long term, it can help you now. If down the road you don’t like your loan servicer, you have a few options to help you get the answers you need, including refinancing your loan with another lender.
