You might assume that the lender you used to obtain your home’s mortgage will be the lender you’ll pay off until the bitter end—until the day you get a letter from them informing you that your mortgage has been sold to another entity. It might comes as a shock, given the amount of time and effort you put into selecting a lender. But once a mortgage is closed and funded, it’s really just a “financial instrument”—and as anyone who’s seen The Big Short knows, mortgages get sold all the time. If you experience this, here’s what you should do right away.
What to know about your mortgage being sold
First and foremost, there’s no reason to panic. Mortgages get sold all the time, and it is no reflection on you or your finances. Lenders will sell mortgages to offload debt from their books and to free up cash so they can originate more loans. It’s not personal, and in most cases you won’t notice much difference—the new lender cannot change the terms of your loan in any way, so your payment amount, interest rate (unless it’s a variable rate), and other specifics should remain the same.
By law, you should be notified of the sale at least 15 days prior to its execution. That notification should identify the new owner of the mortgage and the new servicer of the mortgage, if there is one. The servicer doesn’t own the loan, but gets paid by the lender to manage everything—payments, escrow, statements, etc. Sometimes the servicer on your loan will stay the same in the event of a sale.
You should receive a second letter from the new owner of the mortgage within 30 days. This should include your contact there, as well as their address, phone number, and how to make payments on your loan. Hang onto both of these letters and proceed to your due diligence.
What to check when your mortgage is sold
The chances of having a big problem due to your mortgage being sold are small, but you should still check everything:
- Confirm legitimacy. Your first step is to check for fraud. It’s not unheard of for scammers to send out official-looking letters in the hope of redirecting mortgage payments to shady accounts. One sign that something’s off is if you only receive a letter from the new servicers, but not one from your current lender. Contact both your old and new lender (using independently researched phone numbers and email addresses) and confirm that your mortgage has, in fact, been sold.
- Confirm payment information. Make sure you have all the information you need. The letter you receive from your new lender should include payment and contact information—if it doesn’t, you’ll need to get that info immediately.
- Review the first statement. When you get the first statement from your new servicer, review it carefully. Make sure all the terms are as expected—the rate, the escrow amounts for property taxes and insurance, if your lender is handling those, and the amount of the monthly payment. Also check to ensure that the payment information on the statement matches the information in the confirmation letter you received.
- Accept it. You really have no power here. Your lender almost certainly has every right to sell your loan, and you can’t really do anything to stop it or to influence where it gets sold. And prepare yourself, because your loan might get sold again—multiple times.
What to change when your mortgage is sold
Once you’ve confirmed the sale is legit and that your new servicer has everything right, there are a few things you should do:
- Change payment info, if necessary. Whether you were mailing checks or have an automatic payment set up, make sure you redirect those payments to the new lender. You might need to confirm with your new lender that automatic payments will continue, or set them up again.
- Confirm the first payment. After sending the first mortgage payment to your new lender, wait a few weeks and then contact them to confirm they received it. It’s rare, but snafus with mortgage payments after a sale can lead to some very bad, no good problems, so it’s best to be vigilant until you’re certain everything is cool. The law requires that your new lender give you a 60-day grace period without late fees in case of problems with the transfer (e.g., you send a payment to your old lender by mistake) and that your old lender forward any mistaken payments to the new one. If your new lender charges late fees, question and challenge them. If necessary, contact the Consumer Financial Protection Bureau (CFPB) and file a complaint (you can find some sample letters here to make this a little easier).
That’s it—once you’ve changed your payment info and confirmed the details of the loan and the first payment or two, just proceed as you were. If you’re unhappy with your new lender or servicer, your only option is to refinance the loan and hope your new mortgage doesn’t get sold too.
