You close with one lender and a few months later you get a letter saying your loan has been transferred to a company you've never heard of. This is common and completely legal — here's what's actually happening.
What is a loan servicer?
Your loan servicer is the company that manages your account after closing — they collect payments, manage your escrow account, handle customer service, and process payoffs. The servicer isn't always the same as the lender who originated your loan.
Why loans get transferred
Most mortgages are sold on the secondary market — your lender packages loans together and sells them to investors (often Fannie Mae, Freddie Mac, or Wall Street). When a loan is sold, the servicing rights often transfer too. This is a normal part of how the mortgage industry works and funds new loans.
What to do when you get a transfer notice
- You'll receive a notice 15 days before the transfer and a welcome letter from the new servicer.
- There's a 60-day grace period where you cannot be penalized for sending a payment to the old servicer.
- Set up your new online account with the new servicer before your next payment is due.
- Verify your escrow balance transferred correctly.
- Update any autopay setups — they don't transfer automatically.
Keep records of all payments during the transition period. If you have questions about a transfer, both your old and new servicer are required to respond to written inquiries.