When you take out a mortgage, the company that helped you obtain the loan may not be the same company that handles your mortgage payments for the entire life of the loan.
This is because mortgage lending and mortgage servicing are two different functions.
A mortgage servicer is the company responsible for managing your loan after it has been originated. The servicer may collect your monthly payments, manage your escrow account, provide account information, and handle other routine tasks related to your mortgage.
Understanding the role of a mortgage servicer can help you know where to send payments and what to expect if your loan servicing is transferred to another company.
What Is a Mortgage Servicer?
A mortgage servicer is a company that manages the day-to-day administration of your mortgage.
Depending on your loan arrangement, the servicer may be responsible for:
- Collecting monthly mortgage payments
- Managing your escrow account
- Providing mortgage statements
- Tracking your loan balance
- Applying payments to your account
- Managing certain insurance and tax payments
- Providing payoff information
- Answering questions about your mortgage account
The mortgage servicer may or may not be the same company that originally provided or arranged your mortgage.
Is a Mortgage Servicer the Same as a Mortgage Lender?
No.
A mortgage lender provides or funds the mortgage, while a mortgage servicer handles the ongoing administration of the loan.
In some cases, the same company may perform both roles. In other situations, your mortgage can be serviced by a different company.
This distinction can become particularly important if you receive a notice saying that your mortgage servicing is being transferred.
Why Would a Mortgage Loan Be Transferred?
Mortgage servicing can change for a variety of business reasons.
A lender or servicer may transfer servicing rights to another company as part of its normal operations. The transfer does not necessarily mean that anything is wrong with your mortgage.
The underlying loan generally continues according to its existing terms.
What changes is the company responsible for handling the servicing of the account.
What Happens When Mortgage Servicing Is Transferred?
If your mortgage servicing is transferred, you should generally receive information explaining the change.
The notice may provide details such as:
- The name of the new servicer
- The effective date of the transfer
- Where future payments should be sent
- Updated contact information
- Instructions for online account access
- Information about what happens to automatic payments
Read the notice carefully and keep it with your mortgage records.
Does a Servicing Transfer Change Your Mortgage Terms?
A transfer of servicing does not generally mean that you have received a new mortgage.
The interest rate, remaining principal balance, loan term, and other contractual terms generally continue according to your existing loan documents.
However, the company managing your account may change.
If you receive a transfer notice and are unsure whether something about your actual loan terms has changed, contact the appropriate mortgage professional or servicer and review your original loan documents.
Do You Need to Make Your Payment Differently?
Possibly.
One of the most important things to check after a servicing transfer is where your future payments should be sent.
Your new servicer should provide instructions for making payments.
If you have automatic payments set up through your bank or the previous servicer, review those arrangements carefully so that your payment is directed correctly after the transfer.
Do not assume that an existing automatic payment arrangement will automatically move to the new servicer.
What Happens to Your Escrow Account?
If your mortgage includes an escrow account, the balance generally transfers along with the servicing of the loan.
The new servicer will continue managing the escrow account according to the applicable requirements and your loan terms.
You should review your first statement from the new servicer to make sure the account information appears correct.
If you notice a discrepancy involving your escrow balance, property taxes, homeowners insurance, or payment amount, contact the servicer promptly.
Can Your Monthly Mortgage Payment Change After a Transfer?
A servicing transfer itself does not necessarily mean your mortgage payment should change.
However, your total payment can change for other reasons.
For example, your property taxes or homeowners insurance premiums may have changed, which can affect the escrow portion of your payment.
If the amount shown on your new mortgage statement differs from what you expected, review the statement carefully and contact the servicer if you need clarification.
What Should You Do When Your Mortgage Servicer Changes?
A few simple steps can help make the transition easier.
Read the Transfer Notice
Review the information provided by the previous and new servicers.
Pay particular attention to the effective transfer date and payment instructions.
Update Your Payment Information
If you make payments through online banking, automatic bill pay, or another system, confirm that the payment information is still correct.
Set Up Your New Online Account
If the new servicer provides an online account, register as soon as you can.
Online access can make it easier to view statements, payment history, escrow information, and account balances.
Save Your Records
Keep copies of your previous statements, transfer notice, payment confirmations, and other mortgage documents.
Having a record of your account can be helpful if questions arise later.
Confirm Your First Payment
After the transfer takes effect, verify that your first payment with the new servicer was received and applied correctly.
This extra step can help identify potential problems early.
What If You Accidentally Send a Payment to the Old Servicer?
If you accidentally make a payment using the previous servicer’s payment information after the transfer, do not panic.
Contact both the old and new servicers and explain what happened.
The transfer notice should provide information about how payments are handled during the transition period.
Keep documentation of the payment, including the date, amount, and method used.
How Can You Tell Who Currently Services Your Mortgage?
Your most recent mortgage statement should generally identify the company servicing your loan.
You can also review correspondence from your mortgage company for servicing information.
If you recently received a transfer notice, use that documentation to determine which company is currently responsible for your mortgage account.
Knowing your current servicer is important because that is generally the company you should contact for questions about payments, escrow, account balances, and other servicing matters.
What Questions Should You Ask a New Mortgage Servicer?
If your mortgage servicing has recently changed, consider asking:
- When does the servicing transfer become effective?
- Where should future payments be sent?
- How do I set up online account access?
- What happens to my automatic payments?
- What is my current principal balance?
- What is my current escrow balance?
- Are my property taxes and insurance payments being handled correctly?
- Where can I request a payoff statement?
- Who should I contact if there is a payment discrepancy?
Getting these details early can make the transition much easier.
Does a Servicing Transfer Mean You Need to Reapply for Your Mortgage?
Generally, no.
A servicing transfer is not the same thing as applying for a new mortgage.
You generally do not need to repeat the original mortgage application simply because the company servicing your loan has changed.
The new servicer is taking over the administration of the existing mortgage.
What If You Are Planning to Refinance?
A servicing transfer does not prevent you from considering a refinance.
If refinancing makes sense for your financial situation, you can explore your options regardless of which company currently services your mortgage.
However, it is important to have accurate information about your current loan balance, interest rate, remaining term, and other loan details before comparing refinance options.
Your current mortgage statement can provide much of this information.
Final Thoughts
A mortgage servicer plays an important role in managing your loan after closing. The servicer typically handles payments, statements, escrow administration, and other day-to-day responsibilities associated with your mortgage.
If your mortgage servicing is transferred, the change can feel confusing at first, but it does not necessarily mean your mortgage itself has changed. The most important steps are to carefully review the transfer notice, update your payment information, establish access with the new servicer, and keep detailed records.
If you receive a notice that your mortgage is being transferred and have questions about your payments or account, contact the new servicer promptly so you know exactly how to manage your mortgage going forward.
