man holding a mortgage contract and a pen

Want to Change Your Mortgage Servicer? Here’s What You Need to Know

The Consumer Financial Protection Bureau revealed that consumers still experience a variety of problems with mortgage servicing. From inaccurately applied payments, lost on-time payments, and mistakenly reported negative information to credit bureaus, their mortgage servicers often inconvenience borrowers.

Apart from being nuisances, these problems can majorly impact your credit score and finances. But if you’re having issues with your mortgage servicer, what can you do? Can you switch to a different one?

The answer is no.

Mortgage Service Transferring Rules

The only way to change your mortgage servicer is to refinance your loan and move to a lender in Utah or other similar areas who originates and services their loan. But it’s not wise to get a mortgage refinance to change servicers. If the new loan can’t give you a lower interest rate, access to cash, or shorter loan term, a refinance can end up putting you in more debt.

But unless you’re getting a refinance, you can’t switch to a different servicer under the same lender. Unfortunately, mortgage lenders aren’t required to ask for your approval when appointing the servicer. That is indicated in the servicing disclosure statement when you signed your mortgage documents.

This servicing disclosure statement tells you whether the lender plans on transferring the loan or servicing it themselves. Mortgage lenders can sell the servicing rights to your loan to third parties since these are considered assets to their business. They can also transfer this right without asking for your approval, as long as they notify you of the change. You’ll receive a letter naming your new servicer along with the date of your new payment deadlines.

So if a mortgage refinance won’t work for your case, how can you address the issues with your mortgage servicer?

3-Step Process When Reporting Your Servicer

stressed woman on a call

The solution is to bring up the problem to your mortgage lender.

  1. Call your mortgage servicer to try and resolve the dispute in your records. Most loan servicers have a toll-free customer service number. Explain your problem, whether it’s a lost on-time payment or a misapplied payment. You want to emphasize the gravity of the issue if it’s been recurring for a while now. Document your conversation in writing, and include the name of who you spoke with, date and time of the call, and any assurances they made.
  2. Send a letter if the phone call didn’t help. Be sure to bring up your previous conversation when you explain your problem. You can send the message by certified mail so that you can get a proof of delivery. The Real Estate Settlement Procedures Act (RESPA) requires loan servicers to acknowledge your letter within 20 working days.
  3. If your servicer fails to resolve the issue within 60 business days, file a complaint against them. Here are some government agencies responsible for overseeing servicers:
    • U.S. Department of Housing and Urban Development: Call 1-800-347-3735 or email hotline@hudoig.gov.
    • Office of the Comptroller of Currency (if your mortgage lender is a national bank and also performs the servicing): Call 1-800-613-6743
    • Consumer Financial Protection Bureau (CFPB): Submit your complaint through their website.

Hopefully, your current servicer will improve their methods, or your lender will handoff your loan to someone else. But when your servicer changes, keep an eye on your records to make sure the terms of your loan haven’t changed. Don’t be afraid to get the CFPB involved if your servicer doesn’t deliver on their responsibilities.

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