Borrowers cannot choose their loan service provider
In general, you don't have much contact with your mortgage service provider.
However, if you run into payment problems or need to remove your mortgage insurance, these are the ones you need to dig deeper into.
Unfortunately, when you are not happy with yours, switching mortgage services is not easy.
The only way to switch is to refinance – But even then, you cannot control where the loan will end up.
Here's what you should know about mortgage service providers and what to do if you're not happy with yours.
Check your new plan (November 25, 2020)
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Can I change my mortgage loan service provider?
Borrowers cannot decide who will service their loans. In fact, they have no say at all.
After you close your loan, the lender can sell it to an outside company. This company can also sell the loan without the consent of the borrower. At this point, your servicer can change.
While all of this may sound – and it is – complicated, it mostly happens behind the scenes.
Regardless of how many times your mortgage is sold, the original terms will not change. The loan terms can only change if you choose to refinance.
If a new owner transfers your loan to another servicer, you will receive a written notice with all the information you need about the further payment of your loan.
Regardless of how many times your mortgage is sold, the original terms will not change.
It's a good idea to double-check your billing information after a transfer, especially if you're set up for automatic withdrawals, to make sure your payments aren't late.
However, you do not have to worry that the terms you have agreed upon or your payment amounts will be invalid.
Should I refinance to switch mortgage loan service providers?
The only way to change your mortgage service is to refinance your mortgage with a different lender.
However, there is no guarantee that the new lender will not sell the loan to a servicer that you have had a bad experience with in the past.
Even if your new lender is currently servicing their own mortgages, they may change this policy in the future. Borrowers simply have no control over service decisions.
Changing servicers could be a nice bonus when refinancing, but it shouldn't be included in your decision.
Because of this, it is advisable to avoid refinancing unless you have other benefits. For example:
IIf your income and creditworthiness have improved since you first took out the loan, refinancing can now qualify you for a better interest rateYou can also get refinance shorten your repayment period – maybe from a 30 year fixed loan to a 15 year mortgage – and pay off your home soonerIf you need cash for large upcoming expenses (such as a home renovation) or want to consolidate debt, you can Disbursement Refinancing to tap into the equity of your home.
There are many reasons to refinance your home, but switching loan service providers shouldn't be one of them. This is because you have no control over how the loan is managed.
Changing servicers can be a nice bonus when refinancing, but it shouldn't be factored into your decision.
Check your refinancing eligibility (November 25, 2020)
What to do if you are dissatisfied with your mortgage service provider
Ideally, you will make your payments smoothly and your servicer relationship will be relatively uneventful.
But it doesn't always work like that. Unfortunately, some homeowners have had bad experiences with their mortgage service providers.
And those issues have worsened during COVID-19 as servicers deal with an unprecedented wave of mortgage waivers.
If you have had a bad experience with your credit service provider, e.g. B. Unresponsiveness or negative practices, here are some ways to deal with the situation.
Document every conversation. Keep a record of every interaction you have with the company, including the names of the employees you spoke to, what they told you, and the date the conversations took place. If the company is escalating the problem, it is helpful to have detailed pointers to refer to so that you can hold the organization accountableHave a clear plan of action. Before speaking to the company, have a clear goal in mind and Be ready to articulate your desired outcome. Ask to speak to the appropriate manager or representative to file complaintsFile a complaint with the Consumer Financial Protection Bureau (CFPB). The CFPB enables you File a complaint onlineHowever, you want to organize all of your notes, receipts, and conversation transcripts before submitting them. You must provide the name of the company you are making the complaint through, all relevant people involved, and the details of the problem
About mortgage service providers
When you take out a mortgage from a particular lender, you can be assured that you will work with that lender for the life of your loan.
However, this is often not the case.
Once a lender closes your mortgage loan – that is, you've signed the final documents and received the money – they can either keep your loan and maintain it internally, or sell it.
If the lender keeps the loan and maintains it in-house, you will continue to deal with them directly. That's who you send payments to and who you work with when you need to be indulgent.
Often, however, a mortgage lender will sell their loans to another company.
This company is your “mortgage servicing company” – they will collect your payments and manage your loan for as long as you keep it.
What do mortgage service providers do?
Mortgage service providers handle all of the administrative tasks related to your mortgage.
For one, tThey collect your monthly payment and distribute it to all relevant parties. Part goes to your lender, part goes to property taxes, homeowner insurance premiums are sent to your carrier, and so on.
Your servicer also manages any changes during the life of the loan.
For example, if your home is up to 20% equity and you want to talk about eliminating PMI, your servicer is the company to turn to.
If you're having trouble paying and need to ask for leniency on mortgages, your servicer will make that change as well.
Do Lenders Serve Their Own Loans?
Why are lenders selling their mortgage loans to investors or other companies? A couple of reasons.
Lenders want Save administrative costsThey want to optimize the number of loans they manage so that they can focus on getting new loans. This may be more cost effective than servicing all customersLenders can also make a profit on loan sales
However, not all lenders sell their mortgages.
Some large companies like Quicken Loans, US Bank, and Chase tend to service their own mortgages.
If you borrow through a local credit union or bank, they can keep their services in-house. You can ask when you apply for a mortgage if you want.
If another company buys the loan, they also have the option to manage it in-house or sell collection rights to a mortgage service company.
Mortgage Service Providers FAQ
What does it mean if my mortgage is sold?
If your mortgage is sold, your lender will transfer the loan and its management to a third party. Selling it does not change the terms of your mortgage. However, you may need to send payments and inquiries to the new owner's servicer.
Does It Matter Who Is Serving Your Mortgage?
Your mortgage servicer will handle your payments, as well as forbearance requests and other problems you may have with your loan. It is therefore important to know who your service provider is.
However, since you have no control over who the servicer is, your focus should be on finding the best possible mortgage product and interest rate instead of worrying about who you will be making payments to later.
Can I change mortgage bank without refinancing?
No, the borrowers do not decide who will service their mortgage. If you are not satisfied with your servicer, you will need to refinance a new loan through a lender who does not work with that servicer.
However, the new loan could eventually be sold to your current servicer. So it's not worth refinancing just to change who is managing your loan.
Can my mortgage be sold multiple times?
Yes, the current borrower can sell it to another company.
How do I know who my mortgage loan service provider is?
The servicer should be listed on your monthly mortgage statement. You can also look up your loan service provider through the Mortgage Electronic Registration System (MERS) database.
What is the difference between a mortgage lender and a servicer?
A mortgage lender will loan you the money to buy your home. The lender is the company you work with to set up your loan – from application to closure.
A mortgage servicer will manage the account after it is closed, including monthly payments, PMI cancellations, forbearance requests, and any steps you take to prepay your mortgage.
Why is my mortgage selling so often?
Lenders and service providers sell loans for a variety of reasons. They may be selling to have more cash or they may want to reduce their overhead because loan processing requires human and other resources.
How do I contact my mortgage loan service provider?
Check your monthly mortgage statement or find who your servicer is on the MERS website. Once you have your servicer's name, you can probably find their contact information through their website.
How do I file a complaint about my mortgage service?
You can file a complaint through the Consumer Financial Protection Bureau website.
Check your new plan (November 25, 2020)