A mortgage servicer transfer is a routine process where the company handling your mortgage payments and managing your escrow account switches to a different servicer. Your loan agreement, including interest rate and terms, stays exactly the same — only the servicer handling the day-to-day management changes. This transfer typically occurs when a lender sells your loan, merges with another institution, or decides to outsource servicing to a specialized company.
Under federal law, your current servicer must notify you at least 15 days before the transfer with a “Goodbye Letter” detailing the new servicer’s contact information and the transfer date. The new servicer will send a “Hello Letter” within 15 days after the transfer confirming where to send payments. Importantly, there is a 60-day grace period during which payments sent to the old servicer will not be considered late, protecting you from late fees or negative credit reporting.
When your servicer changes, it’s vital to update automatic payments, verify your payment history on both accounts, and ensure your escrow funds are transferred properly. Keep correspondence for at least a year and monitor your credit reports to confirm a smooth transition. For details on how escrow accounts work in this context, see our article on Mortgage Servicing.
Remember, the mortgage lender and servicer are different entities: the lender provides your loan, while the servicer handles payment processing and account management. Your loan’s ownership may stay the same, even if the servicer changes. To learn more about loan modification options that might be relevant if you face difficulty in payments during a transfer, check our Mortgage Loan Modification guide.
For more details on protecting yourself during a servicer transfer, visit the Consumer Financial Protection Bureau’s resource on Servicing Transfers (CFPB).
Common mistakes to avoid include ignoring transfer notices, not updating payment methods, and confusing servicer changes with loan term changes. Understanding this process can help you stay on top of your mortgage and avoid payment issues.
