Has this happened to you? You recently closed on your mortgage only to find that your loan has been sold to a different institution for servicing.
If you’re like most borrowers, you have questions. Why my mortgage? Why am I now making payments to someone else? Will my mortgage payment increase? Will it affect payments of my property taxes? And what is servicing anyway?
First thing’s first: Relax. As Peter McCarthy, PNC Bank’s Head of Mortgage, puts it, this is a commonplace event.
“People always ask if a transfer affects the terms of their mortgage. And the answer is ‘Absolutely not.’ Many mortgage lenders routinely transfer loans to other companies who have the capability to better service the loan over its lifetime. Your mortgage isn’t being singled out, but more likely is simply one among many in a very large transaction. At the same time, your new mortgage servicer has likely planned well in advance to make sure the transition is easy for you.”
And what is servicing? It encompasses a wide range of activities, including collecting monthly mortgage payments, paying property taxes and insurance premiums, handling escrow accounts, and providing customer service to borrowers throughout the term of their loans.
“If you want the confidence of a single relationship over the life of your mortgage,” McCarthy continues, “ask if you can expect the lender to also be your servicer. But ask before you apply. If you prefer, you can always choose a different lender who will also act as servicer of your loan.”
To clear up any confusion, PNC Bank offers the ins and outs of what to expect in the event your mortgage is transferred to a different servicer.
What Will Change
In short, the only difference will be where you send mortgage payments, as well as the key contact information for any questions you might have.
Your notification will contain detailed information on where to direct payments, whether by mail, automatic payments from your checking account, or other options, such as by phone.
“It’s a process designed to make things as transparent and self-evident as possible for the homeowner,” McCarthy adds. “In fact, PNC Bank has a landing page specifically designed to make the transition simple.”
As one example, if you are making automated payments from your checking account with your current servicer, you’ll be supplied an authorization form to allow drafts to the new servicer. It is important to sign this document and return it to your new mortgage servicer as quickly as possible. That way, your mortgage payments can remain current.
What Won’t Change
When your mortgage is transferred to a different servicer, the most common question is, ‘Will this affect the terms of my loan?’
McCarthy’s answer? “We always want to reassure customers on this score: Nothing will change from your original mortgage contract. The terms, the specified payments, and the payment date all remain the same.”
Further, your new mortgage servicer should automatically take over responsibility for all escrow payments from your previous servicer. That means satisfaction of state and local property taxes will be handled through the new servicer, as well as private mortgage insurance and homeowners’ insurance.
What Are The Potential Issues?
You should have received notification from the previous servicer regarding the transfer of your mortgage servicing. Once the transfer has been made between servicers, you will receive a letter of introduction from your new servicer. Those are sent before your next anticipated payment.
That means it’s important to review the information promptly, taking any needed steps to set up new payment information, and review your account information for accuracy. Further, your new mortgage servicer will certainly reach out if they are not receiving payments yet for your loan.
In a very few cases, there may be issues that crop up. For example, if you were in the process of cancelling private mortgage insurance with your previous servicer, it’s important to verify that this process has continued over your new mortgage servicer.
New mortgage servicers typically understand that there may be confusion associated with switching payments from one servicer to another. That is why a team of customer service representatives will likely be on call to answer any questions or facilitate a solution, all to help ensure a seamless transition.
It’s Easier Than You Think
That’s all there is to it. The transfer process between mortgage servicers is designed to be almost effortless and painless to homeowners like you.
If you receive notification that your mortgage has been transferred, read the welcome documents carefully and follow the step-by-step instructions. Or if you have questions, contact your new mortgage servicer for help.
As McCarthy puts it, “We take a lot of pride in the professionalism of our mortgage service team. While a mortgage servicing transfer may be unexpected by the homeowner, we work hard to make the process as easy and as understandable as it can be.”
Learn more about PNC Bank’s mortgage transfers here.
