A mortgage transfer occurs when your original lender sells your mortgage to another lender, or to a private investment firm. Many first-time home buyers are concerned when they receive a notice that another institution has bought their mortgage.
But mortgage transfers are extremely common in the industry. Your mortgage lender may not have the vast amounts of money required to continually issue mortgages, and so will sell your mortgage to a larger company that does have the cash reserves. The two largest mortgage investment firms in the US are Fannie Mae and Freddie Mac, and they engage in mortgage transfers all the time.
A mortgage transfer may involve your original lender continuing to handle your mortgage payments, escrow payments, and so on. Or the new lender may take over all of the aspects of servicing your mortgage.
Under federal law, your mortgage lender must give you a Mortgage Servicing Disclosure statement at your closing. This document will let your know whether your lender intends to transfer the servicing of your mortgage, in addition to the mortgage itself, to another lender.
A mortgage transfer does not affect you in any way. None of the terms of your mortgage--the interest rate, the monthly payment, fees, and so on--will change. You will simply be paying a different company.
If your original mortgage lender is going to have the new company service your mortgage, your original lender is required to let you know who the new company is, where that company is located, where payments should be sent, and when your first payment to the new company is due.
You will be notified at least fifteen days before your mortgage is transferred to the new company. Also, by law, if you continue to send your payments to your original lender for up to sixty days after the mortgage transfer, you cannot be penalized.
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