My Loan Just Closed. Why Has It Already Been Transferred?!

Don’t let refinancing a home or purchasing a home become confusing or frustrating. Your lender should alleviate all confusion and frustration. As hard as lenders try to make the experience as easy as possible from the first inquiry to the end of the process, there are still aspects that can leave borrowers a bit stymied. The area that tends to lead to a great deal of confusion is transferring of the loan once the loan process is complete.

As you may know, the mortgage industry is incredibly regulated. The regulations are in place to protect you as a consumer, as well as the businesses involved. Because of regulations, there are different levels of licensing that are needed – one of these areas of licensing is for servicing loans.

Not all lenders are licensed to service loans, so it is common for lenders to sell every loan originated as quickly as possible in a secondary market. Selling the loans quickly keeps lenders compliant with servicing regulations and it helps the new loans find a permanent “home” as quickly as possible. Plus it also cuts down on some of the confusion of where to mail payments.

“How will I know when my loan has been sold?”
When a loan is sold, the purchasing company sends a ‘welcome’ letter, and the selling company sends a ‘goodbye’ letter. These letters advise when the first payment is due to the new investor (NOT the date of the first payment on the loan necessarily). They also include the new loan number, the contact phone number for the new servicing company, and the mailing address for the payments.

“Who does the first payment need to be made to?”
As a general rule of thumb, when in doubt, send the payment to the original lender. When payment is received it is record it on the account, and if it belongs to that lender, it is deposited. If, however, the payment belongs to an investor, it is forwarded in an overnight package. When the payment belongs to an investor, there is a small delay, but it is minimal.

One last thing to keep in mind:
Any time your loan is transferred, you as a consumer are protected by a sixty day window in which no late fees can be assessed and you cannot be reported negatively to the credit bureaus. This regulation is in place to protect consumers during the transfer loans while it is boarded with the new company, and transferred from the original lender.

The loan process should be seamless, and lenders who care work diligently to keep their team as educated as possible. There will, however, always be questions that come up. As a borrower, it’s important to understand the products you invest in so you should never hesitate to reach out and ask. Expert Loan Advisors and their team can always help or get you to the right person to help.

Written By: Cara Haynes, Client Service Manager at Royal United Mortgage LLC
Published:  9/2/2015