What do I do with conflicting mortgage loan instructions?

Posted by  on Mar 31, 2015

Q: Recently, I got what seem like conflicting letters about my mortgage loan. One said it had been sold to a different bank. The other instructed me to send payments to a completely different company. Which should I believe?

A: This situation is not as unusual as you might think. The company that owns your loan is not always the one that services it.

Mortgage lenders are often fairly specialized. Some are set up to make their profits primarily from originating loans, and then they sell those loans to someone else. Others may sell off loans as a risk management move in order to reduce their exposure to potential non-performing loans, especially if they have a heavy concentration of loans in a particular area or segment of the housing market. Still others may retain ownership of their loans but outsource the servicing of it to another company.

Mortgage servicing firms vary greatly in size and type -- some of them are not even banks but simply process payments for the banks that own the loans. Unfortunately, the Consumer Finance Protection Bureau has found that mortgage servicing firms also vary in competence and conscientiousness.

If you have received differing instructions about the ownership and the servicing of your loan, you might want to confirm with the new owner that the servicing instructions you received are legitimate. Also take note of the effective date of any change because the new instructions might not apply right away. None of this should change your mortgage rate or payment schedule.

Once you change your payment destination, pay careful attention to the checking account you use to pay your mortgage bills, to make sure that those payments are not being rejected or otherwise failing to go through. Also, save any notices you get about changes in ownership or servicing instructions for your loan so you can document that you have followed the instructions you were given, and so you know whom to contact in case of a problem.


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