Mortgage servicing transfer: What you should know

When you take out a mortgage with a lender, you’ll start making your monthly mortgage payments to them. However, it’s possible that down the line, you’ll receive a notice that your mortgage servicer is changing. That means you’ll need to start sending your payments to your new servicer after a certain date.

If this happens to you, don’t be alarmed. Mortgage servicing transfers are a common practice in the lending industry because it allows lenders to free up funds to issue more loans. However, it’s important that you pay attention to a mortgage servicing transfer notice so that your mortgage payments are going to the right place. Here’s a closer look at what homeowners need to know about mortgage servicing transfers.

What is mortgage servicing?

While your lender is the financial institution that loaned you money, mortgage servicers are responsible for administering loans after they’ve closed. They’re who you send your mortgage payments to. Mortgage servicers are responsible for:

• Collecting and forwarding payments
• Managing escrow accounts
• Answering loan questions
• Providing loss mitigation options

When you first close on your loan, your servicer is typically your lender. Some lenders, including Rocket Mortgage^®, serve as both. However, your lender can sell the servicing rights for your loan to another party on the secondary mortgage market, and they’ll become your new servicers. Your mortgage may be sold multiple times over the life of the loan. It could also be packaged with a group of other mortgages and sold as a mortgage-backed security.

Your servicers also may hire another party known as a subservicer to manage the mortgages they own on their behalf. While you can’t choose your servicer, the terms of your mortgage don’t change after a servicing transfer.

Why do mortgage servicing transfers happen?

Mortgage lenders, or originators, often sell loans they have issued to investors in order to free up the capital to originate more loans. Otherwise, they’d have to wait 15 – 30 years for you to fully repay the loan. As a result, mortgage servicing transfers are quite common. Here are some of the most common reasons these transfers occur:

• Your lender wants to free up funds.
• Interest rates have changed.
• Your lender is seeking to reduce risk by getting this debt off their books.
• Your lender wants to specialize in origination.

Like many businesses, the lending business tends to go in cycles. In the mortgage industry, rhythms can be dictated by interest rates. It’s easy to help someone refinance or purchase a home when rates are low. When rates rise, there are fewer people who benefit from a new mortgage. Lenders and servicers adjust.

Servicers looking to generate cash may sell part or all of their portfolio available for sale to other servicers. Interested servicers may see this as an opportunity to grow their portfolio.

Rocket Mortgage is an example of a lender that also acts as a servicer. By providing quality service during both origination and servicing through the life of the loan, it gives the lender an opportunity to earn customer loyalty and consideration the next time the customer needs a loan.

Since Rocket Mortgage is a servicer who also originates loans, we conduct regular reviews of our servicing portfolio to see if you might be in a situation to reduce your monthly payment or interest rate or take cash out of the equity in your home. We’re here to assist you with your financial goals.

You’re going to want a servicer who’s going to work with you when life throws a curveball. Should you ever have trouble making your mortgage payment, it’s your servicer who will work to understand your situation and go over options to help you move forward with the best possible outcome. Who you work with matters.

We’re the most-awarded brand among mortgage servicers in J.D. Power’s time doing the survey¹. If your servicing is moving to Rocket Mortgage, you’re in good hands. 

What changes in a servicing transfer?

The only thing that changes for you with the transfer of servicing rights for your mortgage is who you make your payment to. Your new servicer will send monthly statements and information on how to submit your mortgage payment online, over the phone, or by mail.

If you make your payment online, you’ll create a new account with your new servicer. If you have bill pay set up through your bank, you’ll need to change the recipient to your new servicer.

Your new servicer will also be your point of contact for support or questions about your loan. If your servicing has been transferred to Rocket Mortgage, welcome! You'll be getting information shortly on next steps.  

What doesn’t change in a servicing transfer?

Here’s a list of things that you won’t have to worry about changing after your mortgage servicing transfer:

• Payment amount
• Interest rate
• Payment date
• Loan balance
• Loan term length
• Grace period
• Any other loan contract details

Important mortgage servicing transfer rules

Your former mortgage servicer must send you a notice about your service transfer at least 15 days prior, and your new servicer must send you a notice within 15 days following the transfer. Sometimes, both notices are combined with the first notice. Either way, these notices must contain the following information:

• Your new servicers name and contact information
• The date that your loan servicing rights will be transferred
• The date that your old servicer will no longer accept payments
• The day your new servicer will begin to accept payments

Borrowers can still make their mortgage payment to their old servicer for a grace period of up to 60 days after the transfer without being penalized.

Tips for managing the switch

At first, it may seem unsettling that the mortgage on your home is changing hands. In most cases, the transfer is actually easy and trouble-free. Here are some ways you can help avoid any potential issues:

• Keep an eye out for correspondences from the old and new servicers.
• Follow the instructions given to update your payment information with your new servicer.
• After the transfer, review your new account information for accuracy.
• Contact your new servicer if you encounter any issues, questions, or discrepancies.

If your mortgage servicing has been transferred to Rocket Mortgage, visit this page for more details on what you can expect.

The bottom line: Mortgage servicing transfers are usually seamless for borrowers

It’s common for lenders to sell mortgages they’ve originated to offload that debt to a different servicer. If that happens to your mortgage, you’ll have a new servicer. The terms and details of your loan won’t change, but you will have a new servicer responsible for the day-to-day administration of your mortgage. Once your mortgage is transferred, you’ll begin making payments to your new servicer.

Good servicing is important, and Rocket Mortgage has won awards for our performance as mortgage servicer. If you have questions about your mortgage servicing, you can contact Rocket Mortgage today.

¹ Rocket Mortgage has won more awards than any other brand in the J.D. Power U.S. Mortgage Servicer Satisfaction Studies. This customer satisfaction study has been conducted annually from 2002 – 2024. Visit JDPower.com/Awards for more information.