New Rules for Mortgage Transfers

The Federal Reserve prepared rules that will be go into effect on January 1, 2011* that help mortgage borrowers by notifying them when their loans get transferred to another company.

Before the new rules, if your loan was sold or transferred from your current lender to a new lender, the new lender did not have to tell you that it acquired your loan. The new rules will ensure you know who owns your loan.

The new rules ensure that you know who owns your loan and who can handle certain issues, including payment disputes and loan modifications.

The new rules require the company that acquires your loan to send you a notice within thirty days of acquiring it. Among other things, the notice must disclose:

  • the new owner’s identity, address, and telephone number;
  • the date the loan was transferred; and
  • contact information that you can use to reach an agent or other party, if any, authorized to act on behalf of the owner.

New loan owners are required to send you these notices for:

  • any loan you have taken out on your principal dwelling (so loans on a vacation or business properties would not be covered), including loans to purchase or refinance your home; and
  • home equity loans, also known as second mortgage loans, and home equity lines of credit (HELOCs).

Even with a new loan owner, the company that “services” or handles your loan might not change and you might continue to send your mortgage payments to the same address. If that loan servicer changes, you will receive a separate notice.

For more information about servicing companies, read the Federal Trade Commission’s publication Mortgage Servicing: Making Sure Your Payments Count.

* To provide compliance guidance and greater certainty on the new requirements, the Board published interim rules in November 2009, which were effective immediately. To allow covered parties time to make any necessary operational changes, they may continue to follow the November 2009 interim rules until the mandatory compliance date for the final rules, which is January 1, 2011.

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