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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.
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