What Does Transfer of Servicing Mean?
When you take out a mortgage with a mortgage company or a bank, there is always a possibility that the lender will sell or transfer the servicing of your loan to another institution. Servicing means the collection of payments and management of operational procedures related to mortgages. When servicing is sold, it means that another lender will be taking your payments, handling your escrow accounts, paying your insurance and taxes and answering your questions. This may happen right after you close the loan or several years later.
The practice of selling or transferring the servicing of your loan is legal and is very common in the mortgage industry. When the servicing is sold, it is usually packaged in a bundle with other loans. Some mortgage companies only originate loans and sell or transfer the servicing immediately. It is more cost-effective for these companies to do this because servicing is not a part of their business. It is not uncommon to get your mortgage from a neighborhood lender and have it transferred to an institution in another state. It is also possible for your mortgage servicing to be transferred more than once during the life of your loan.
Whether or not your servicing is sold has nothing to do with the quality of your loan or your payment history. It has, in fact, nothing whatever to do with you personally.
