The lender's letter begins, "We're writing to inform you that your mortgage loan has been sold." Your first thoughts are why did this happen and what does it mean?

Don't panic. "Selling the loan" typically means selling the servicing rights to the loan. And as a home owner and mortgagor, it merely means that you'll be making your payments to another company. It may not ever happen to your loan; yet again, it might happen several times during the life of your loan. But if it does, it's important to know that you have specific rights as a mortgage consumer.

When you first applied for the mortgage, the lender gave you information about the likelihood of your loan being sold to another investor. This figure was expressed as a percentage, i.e. "greater than 50%." These guidelines are federally mandated including the fact that once your loan is sold, you must hear from both the lender saying "goodbye" and the one saying "hello" to your mortgage. Both investor/lenders must provide you with the following information in a timely manner:

What The "Goodbye" Lender Must Provide:

At least fifteen days before the date your next payment is due, the lender selling your loan must notify you in writing, provide you (on their letterhead stationery) the name of the new company, its full address, a phone number (800# preferred), and the name of a contact person who can answer your questions.

What The "Hello" Lender Must Provide:

The company purchasing your loan must send you the same information in the same time frame, complete with the name of a real person (not a voice mail system) that you can speak to if you have questions.

The federal government mandated these guidelines several years ago when bogus mortgage scams had unwitting consumers re-routing their monthly payments to blind post office boxes when, in fact, their loans had never been sold. Some of the buyers found out too late---when they received loan delinquency notices from the true, original servicers of their loans!

That's why if you do not receive both the "goodbye" and "hello" letters, contact your current mortgage servicer for clarification. Federal guidelines prohibit your loan from being termed "delinquent" for a period of sixty days during the transfer of servicing. You have time to check out the facts before making any change, and don't let anyone convince you of the contrary!

If you'd like more information, an excellent free booklet is available entitled "When Your Loan is Transferred to Another Lender." You can request it from the Mortgage Bankers Association of America, 1125 Fifteenth St., NW., Washington, DC 20005.

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Published: February 11, 2000

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