What to Do if Your Mortgage is Transferred

Have you received a letter notifying you that your mortgage has been transferred? If so, no need to worry! This is a common practice among banks and mortgage companies. Once your loan closes, your lender will either keep the loan and collect your payments or transfer your loan to another servicing company. This won’t affect your rate or mortgage terms, only that the lender has transferred the rights to service the loan.

Why do lenders transfer loans?

When you take out a home loan, it is underwritten, funded and serviced by a bank or a mortgage company. These financial institutions use their own funds to make the loan, but then often turn around and sell them to the secondary mortgage market to mitigate the risk of running out of capital. Selling these loans in the secondary market allows lenders to replenish their funds and continue to offer home financing to other homebuyers!

Mortgage companies are legally required to inform you if your loan has been transferred to a new servicer. So if you receive this notification, don’t be alarmed! Your lender will provide you with all of the information and create a seamless transfer, so you don’t have to. The details of your loan – your mortgage rate, terms and other agreements – will not change if your loan is transferred to another servicer. These details are locked into your contract and will remain for the life of your loan.