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Mortgage Loan Transfer and Home Loan Transfer Guide

Loan Transfer

There are a lot of things to consider when going through a home loan transfer even though it is very common in the mortgage industry. Whether your home loan be through a mortgage company or a bank, the transferring process is usually a bundle of several loans. Servicing means the collection of payments and management of operational procedures related to mortgages. In turn, when your mortgage loan is sold to a new lender they will handle the management of your entire loan, including payments, escrow accounts, insurance and taxes. The selling or transfer can take place immediately after closing of your home loan or years later. And this can happen several times throughout the life of your mortgage loan.

How Does A Mortgage Loan Transfer Affect Your Loan?

The transfer of service does not change the original terms of your mortgage loan. Although a lender does not have to ask your permission to transfer servicing, they must notify you in writing of the pending transfer. The home loan transfer process takes approximately 60 to 90 days. The borrower still has the obligation to continue to pay the monthly mortgage during this transition period. The lenders must protect the credit history of the borrower during this period. They do this by ensuring that payments will not be marked late if one lender receives payment and it should have been directed to the other lender. It is very important that you receive letters from both lenders, new and old. If you receive only a letter from the new servicer, be sure to call your original servicer to verify that your loan actually has been transferred. You must keep your servicer informed of your current mailing address, so that you will receive all relevant correspondence.

To Whom Do You Send Your Next Payment?

It is very important that you receive letters from both the new and old lenders. If you receive only a letter from the new servicer, be sure to call your original servicer to verify that your loan actually has been transferred. You must keep your servicer informed of your current mailing address, so that you will receive all relevant correspondence If you have received both letters or have verified the mortgage loan transfer with your old servicer, be sure to send all payments from that point on to your new servicer. If you send the payment to the old servicer, you run the risk of the payment not getting to the correct lender in time.

What Happens to Your Escrow Account?

It is your old servicer's responsibility to inform the insurance company and your tax authority of the change in servicer. A follow-up call from you the insurance company or tax authority can help ensure that the tax or insurance bill is not sent to the wrong servicer. If your escrow account is interest-bearing, all interest due should be credited to your account by the old servicer before the transfer takes place.

What About Insurance Policies and Taxes?

If you receive a notice that either your insurance or taxes are due, call your new servicer and make sure that company has on file that funds have been escrowed for the premium. If the new company has not received a copy of that bill, it will probably direct you to send in the bill for payment.

Who Sends You the End of Year Tax Statement?

In most cases you will receive your tax statement from your current lender, but there are instances when you may receive a statement from all lenders who carried your loan for that tax year.

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