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Transfer of Your Mortgage

Mortgage Library: Managing Your Mortgage: Transfer of Your Mortgage

Lenders may keep your loan in their portfolio or they may sell or transfer the servicing of your loan to an investor. The practice of selling of the loan is very common in the mortgage industry. The largest investors in the country are Fannie Mae and Freddie Mac.

When a lender sells your loan to another institution they may or may not sell the servicing on the loan. When servicing is sold, it means that another lender will be taking your payments and handling your escrow accounts. The federal law requires the lender give you at closing a Mortgage Servicing Disclosure Statement, which discloses to the borrower whether the lender intends to service the loan or transfer it to another lender.

The sale of the loan does not affect you or your mortgage in any way. The original terms and conditions of your mortgage will stay the same. The company that holds your loan have to inform you who your new servicing company will be, where it is located, where you should send your next payment, and when the new servicer will begin accepting payments. Generally, the loan servicer must notify the borrower 15 days before the effective date of the loan transfer. Under the RESPA, as long the borrower makes a timely payment to the old servicer within 60 days of the loan transfer, the borrower cannot be penalized.

Related Articles:

Fannie Mae and Freddie Mac are stockholder-owned corporations chartered by Congress. They purchase residential home loans from mortgage lending institutions, packages the mortgages into securities and sells the securities to investors. By doing so, they provide a continuous flow of affordable funds for home financing that results in the availability of mortgage credit for low-, and moderate-income Americans.

Fannie Mae is a private shareholder-owned corporation created by Congress in 1938. Today Fannie Mae is the nation's second largest corporation in terms of assets and the largest source of residential mortgage funds in the United States.

Freddie Mac has financed homes for 20 million families -- equal to one of every six homes in America. If you would like to learn more about Freddie Mac you can read Frequently Asked Questions About Freddie Mac.

Consumer Protection Laws and Your Rights

Government Publications:

Transferring A Loan Between Lenders This brochure will answer many of the questions concerning the loan transfer.

Mortgage Servicing (FTC) This brochure explains what the housing act requires lenders or servicers to do and what your rights are under the Housing Act if your home mortgage servicing has been sold to another company. It also tells what you can do if you have a complaint about the transfer of your loan servicing.

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