MORTGAGE SERVICING TRANSFER DISCLOSURE
Mortgage service transfer
Before applying for the mortgage loan, you need to know the rights and regulations under the Real Estate Settlement Procedures Act (RESPA). Loan Servicing by definition is a process of collecting principal, interest and escrow expenses by a company (servicing firm, mortgage bank etc.) from borrowers. There may arise a situation where your servicer may be changed. In case of change in loan services certain procedures are followed.
First thing to do in case of transfer of mortgage servicing to a new servicer is written intimation regarding the transfer. Make sure that you receive the notice from your present loan service provider, at least 15 days before of the assignment, sale, or transfer of the servicing. A notice is sent to you with 15 days from the effective date of transfer of the servicer. You may get a common notice from existing and new servicer. If you have been intimated regarding the transfer at the time of settlement, you the “15 day rule” does not apply. There are certain circumstances when the act allows your servicer to send delayed notice (as late as 30 days after transfer). When your servicer has been changed abruptly, this clause may become applicable. This applies only if your servicer is fired for cause, is in bankruptcy proceedings, or is involved in a conservatorship or receivership initiated by a Federal agency.
Notices must contain certain information like the effective date of the transfer of the servicing, the name, address, and toll-free or collect call telephone number of the old and new servicers. If you pay EMI of your loan to old servicer, within 60 days following the effective date of the transfer, the new servicer will not charge any penalty on the EMI.
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