Your Rights After Your Lender Transfers Your Home Loan
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If your lender sells or transfers your home loan, you have the right to be notified. This transfer won't change the terms of your loan, but you need to know who your new mortgage holder or servicer is so you can avoid negative consequences like payment issues, late fees, or credit problems.
Written by the Upsolve Team. Legally reviewed by Attorney Andrea Wimmer
Updated January 15, 2025
Many new homeowners don’t realize that after signing their mortgage, the lender often sells or transfers the home loan. These sales are legal under federal law and are common in the lending industry.
If your mortgage is sold, your interest rate or loan contract will stay the same, but it might affect you or your credit report if you don’t get the proper notices or if the mortgage servicer makes a mistake. Homeowners have rights after a lender transfers their home loan. We’ll help you learn about those rights and gain some knowledge on mortgage sales and the home mortgage industry.
Understanding the Key Players in Mortgage Sales
It’s easier to learn about mortgage sales when you know the parties that are involved. Here are the main players:
Mortgage lenders
Mortgage servicers
Investors
What Is a Mortgage Lender?
The mortgage lender or mortgage owner is the company that owns your mortgage. They’re also known as your creditor. It could be the company that originally lent you the money for your property, or it could be a different company that bought your mortgage.
If you need to find out who owns your mortgage, you can contact your mortgage servicer for information. You might also be able to find information on the servicer’s website.
What Is a Mortgage Servicer?
The mortgage servicer — also called a loan servicer or servicing company — is the company that manages the mortgage. The servicer deals with monthly payments, communicates with borrowers, and manages escrow accounts and foreclosure proceedings.
A mortgage lender can service its own mortgage and be both the owner and servicer, but this is rare. Also, even if your mortgage changes hands, your mortgage servicer might stay the same. A mortgage servicer can also have a sub-servicer to help out.
How Do You Know Who Your Mortgage Servicer Is?
You can find the contact information for your mortgage servicer on your mortgage statement. If you can’t find your mortgage statement, you can look up information on the Mortgage Electronic Registration System (MERS) website or call them at 1-888-679-6377.
MERS is a tracking system for mortgages and mortgage servicers.
What Is an Investor?
Investors are companies that buy mortgages. Freddie Mac and Fannie Mae are well-known examples of mortgage investors. These organizations purchase loans from lenders, allowing the lenders to free up funds and issue new loans to other borrowers.
When an investor buys a mortgage, they aren’t involved in the day-to-day management of the loan account. Instead, they rely on a mortgage servicer to handle tasks like collecting payments and managing escrow accounts. Investors primarily focus on the financial returns they earn from the loan, such as interest and other fees.
Why Do Lenders Sell or Transfer Mortgages?
Mortgage lenders make a profit on the interest from your home loan, but interest can take 10–30 years or more to collect. To keep the cash flow moving, mortgage lenders will sell mortgages to private investors or government sponsored enterprises (GSEs).
Two of the most common GSEs are:
Freddie Mac, also known as the Federal Home Loan Mortgage Corporation
Fannie Mae, aka the Federal National Mortgage Association
When mortgages are sold, the mortgage company is paid for the loan, usually in the form of cash or a bond. This gives lenders the capital they need to make loans to other borrowers.
When Will Your Mortgage Be Sold?
There’s no guarantee that your mortgage will be sold, but if it is, the sale can happen at any time. Your mortgage may be sold shortly after you sign the loan or several years later. Also, your mortgage may be sold several times during the life of the loan.
Does a Mortgage Sale Affect Your Loan Terms?
Generally speaking, your loan terms don’t change when your mortgage is sold.
If your mortgage has a fixed interest rate, you don’t have to worry about your interest changing with a mortgage sale. If you have an adjustable-rate mortgage (ARM), your interest rate could change whether your mortgage stays with the current owner or is sold to a new owner.
What Steps Do You Need To Take After a Mortgage Transfer?
The most important thing you can do as a homeowner is stay informed and read all notices you receive. If your mortgage is sold or transferred, you’ll be alerted via a mailed notice.
It’ll tell you who now holds your mortgage and which company will service it. It’s important to know who holds your mortgage because you’ll need to know who to contact to request information or ask for a loan modification.
Once you know the new servicer, send your mortgage payments directly to them to avoid delays. Although your old servicer is required to forward payments to the new servicer, mistakes sometimes happen. If they do, you may face late fees or harm your credit score.
Being organized and proactive is the best way to avoid any mishaps. If something doesn’t seem right — such as a missing payment or an error on your loan statement — don’t hesitate to contact your new servicer to resolve the issue quickly.
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What Are Your Rights When a Mortgage Is Sold or Transferred?
When your mortgage is sold or transferred, federal laws protect you as a borrower by ensuring you receive important notices and by giving you time to adjust to the transition. These protections require lenders and servicers to notify you when your mortgage changes hands and provide a 60-day grace period to avoid late fees if there’s confusion during the transfer process.
These provisions are outlined in laws like the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act
Below, we’ll explain your rights in more detail, focusing on the two main protections: the notice of transfer and 60-day grace period.
Notice Requirements
When the ownership of your mortgage changes, the new owner (often called the assignee) is required by federal law (15 U.S. Code § 1641) to notify you within 30 days of the transfer.
This transfer notice will include:
The name, address, and phone number of the new owner
The date the ownership transfer took place
Where the ownership is officially recorded
Contact information for someone acting on behalf of the new owner
Other details related to your mortgage contract
If your mortgage servicer also changes, you’ll receive separate notices from both the old and new servicers. Your old servicer must notify you at least 15 days before the transfer, while your new servicer must send a notice within 15 days after taking over your account.
In some cases, the two servicers combine their notices into one, which must still arrive at least 15 days before the transfer date.
60-Day Grace Period
To protect borrowers from confusion during a transfer, federal law gives you a 60-day grace period after the mortgage changes hands.
This grace period is designed to give you time to adjust to the change and ensures you won’t be penalized if payments are misdirected during the transition
During this time, if you accidentally send a payment to your old servicer instead of the new one, the new servicer can’t charge you late fees or report your payment as delinquent to the credit bureaus.
What Should You Do if There’s an Issue With Your Mortgage Transfer?
Mortgage transfers don’t always go smoothly. Errors can happen during the process, and these mistakes may impact your payments, credit score, or even your ability to stay in your home. The good news is that you have tools and protections to resolve most issues quickly.
What To Do if a Payment Isn’t Credited Properly
If your payment doesn’t get credited correctly after a mortgage transfer, start by notifying your new mortgage servicer and lender in writing. This ensures there’s a paper trail documenting the issue.
Payment errors can lead to late fees or negatively impact your credit score, so it’s important to address the problem as soon as you notice it.
If the servicer doesn’t resolve the issue promptly, consider filing a complaint with the Consumer Financial Protection Bureau (CFPB). The CFPB holds mortgage companies accountable for complying with federal laws. Filing a complaint can help resolve your issue and may also highlight systemic problems with the company’s practices. In serious cases, the CFPB can fine the company or stop them from collecting payments until the issue is fixed.
How To Ensure Forbearance and Foreclosure Records Are Accurate
If you’ve entered into a forbearance plan or are in the middle of a foreclosure, short sale, bankruptcy, or deed-in-lieu of foreclosure, it’s essential to confirm that your new lender has correctly recorded your account details. These situations involve sensitive timelines and agreements that could be disrupted by errors during the transfer process.
Review your records carefully and verify that the new servicer is honoring the terms of your original agreement. If anything seems incorrect or if foreclosure proceedings are moving forward in error, contact an attorney immediately to protect your rights, especially if your home is at risk.
Double-Check Records for Refinances and Second Mortgages
If you’re trying to refinance or have a second mortgage that’s been transferred, review your mortgage documents, escrow account, and payment history to ensure everything matches. Even small errors, like incorrect balances or misapplied payments, can create significant obstacles when refinancing or managing multiple loans.
If you notice discrepancies, contact your new servicer to resolve the issue as soon as possible.
Let's Summarize...
Many people don’t realize their mortgages can be sold after they sign a home loan. Your mortgage lender, mortgage servicer, and mortgage investors can, and often do, change even after you sign a contract for your home loan.
But when this happens, you’re required to be notified. Pay attention to notices from your mortgage company, and make sure your payments are reaching the correct company at the correct time.
