Mortgage lenders sell loans for a variety of reasons. Even though your mortgage changes hands, it doesn’t change the terms of your loan or how you will pay it back. The transaction takes place between the two lending agencies. You are basically just along for the ride. While they have to inform you of what is happening, you, as a borrower, may not have much to say about the matter. Learn as much as you can and always be aware of what is happening during the transition.
Why Mortgages Change Hands
Mortgage lenders sell loans to raise capital or to thin out the number of loans they are servicing at one time. Over time, some lenders simply close their doors and liquidate the loans they service as if they are tangible assets. The sale has nothing to do with you on a personal level but will affect you all the same.
Watch for Notices or Memos
If your lender chooses to sell your loan to another company, they will send you letters and other notices to inform you of what is going on. Keep a close eye on the notices and be aware of what they say. The new service provider may require that you update your information or provide additional paperwork like insurance policies or tax returns.
Monitor Your Credit Report
When your loan is taken over by the new owner, it should be reflected on your credit report. Keep a close eye on all three of your credit reports so that all of the information is up to date and as accurate as possible. Changing service providers may cause your credit score to change but it should rebound quickly once the previous lender drops off.
Maintain Your Payments
Throughout the transition from one lender to another, it is essential that you continue paying your installments on time. The notices you receive will tell you when to change from one lender to another in terms of submitting your payments so as long as they are on time, there should be no penalties. If you have questions about where to send your payment, call ahead and ask. It’s always better to be safe than sorry.
If you find out that your lender is selling your mortgage, don’t be too alarmed. It’s a normal business practice and may even benefit you in the end. Talk to both lenders and get to know them a little. You may end up liking the deal more than you thought.