Definition
Loan servicing transfers occur when your loan's administration moves from one company to another. Federal law requires 15+ days notice. The old servicer must properly credit any payments received after transfer date. Sometimes transfers cause temporary payment confusion.
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When servicing transfers, borrowers receive official notice at least 15 days before the change, along with information about the new servicer and where to send payments. The old servicer must properly credit any payments received after the transfer date. These transfers can be frequent in the mortgage industry as companies sell servicing portfolios for financial reasons. While transfers are routine, they sometimes cause temporary confusion or payment processing delays.
Pro Tip
During a servicing transfer, make extra copies of payment receipts and verify that initial payments to the new servicer post correctly.
Example
Your mortgage servicer is acquired by a larger company; you receive notice that your loan servicing will transfer, and you're required to send future payments to the new servicer's address.