When an individual takes out a mortgage from a bank to purchase a home, the bank often sells, assigns, or transfers the mortgage to a mortgage service provider to manage. Mortgage service providers then manage the mortgage by sending monthly statements and collecting payments from the home purchaser.
Banks generally include provisions in their loan agreement contract with the home purchaser granting the bank the right to transfer the mortgage. Thus, the home purchaser has generally consented to the transfer ahead of time.
Unfortunately, home purchasers don’t often get to choose which mortgage service provider their mortgage is transferred to and their mortgage may be transferred more than once.
Federal regulations require that banks provide advanced notice of a mortgage transfer. This notice must include:
- The name, address, and phone number of the Mortgage Service Provider
- The date of the transfer
- Information about any impact the transfer will have on mortgage insurance
- A statement that the assignment, sale, or transfer of the servicing of the mortgage does not affect any term or condition of the security instrument (other than terms directly associated with the servicing of the loan).
There are some unfortunate issues associated with mortgage service providers. Because mortgage service providers often have limited interest in the actual value of the mortgage, their primary motivation is to minimize servicing costs.
This may involve streamlining defaulted mortgages into foreclosure instead of working with the home purchaser to adjust or refinance the mortgage. In some instances, these practices may be unlawful.
If you believe your mortgage service provider is treating you unlawfully, you should contact an experienced real estate attorney to help you investigate the matter and resolve your issue.