transfer of mortgage servicing rights

Get Started Here:

  • Homeowners & Homebuyers

Search

  • Leadership & Organization
  • Reports & Plans
  • Do Business with Us
  • Diversity, Equity, and Inclusion
  • Equal Employment Opportunity / No FEAR Act
  • FOIA & Privacy
  • Information Quality
  • Budget, Finances, and Performance
  • Workforce Ombuds
  • FHFA Policies
  • Fannie Mae & Freddie Mac
  • Federal Home Loan Bank System
  • Examiner Resources
  • Legal Documents & Suspensions
  • Rulemaking & Federal Register

Advisory Bulletins

  • Dodd-Frank Act Stress Tests
  • LIBOR Transition
  • History of Fannie Mae & Freddie Mac Conservatorships
  • Senior Preferred Stock Purchase Agreements

2023 Scorecard ​

  • FHFA Stats Blog
  • Meet the Experts
  • Mortgage Translations Home
  • Search or Browse Documents
  • COVID-19 Resources
  • Borrower Education Materials
  • Interpretive Services
  • Language Translation Disclosure

Skip Navigation Links.

Mortgage Servicing Transfers

The Federal Housing Finance Agency (FHFA) is issuing this advisory bulletin to communicate supervisory expectations for risk management practices in conjunction with the sale and transfer of mortgage servicing rights (MSRs) or the transfer of the operational responsibilities of servicing mortgage loans owned or guaranteed by Fannie Mae and Freddie Mac (collectively, the Enterprises).

​Background

​The sale and transfer of MSRs or the transfer of mortgage servicing has recently increased for a number of reasons. Some servicing transfers are initiated by the Enterprises. An Enterprise may seek to facilitate or require the transfer of mortgage servicing to a different servicer in an effort to improve mortgage servicing performance. A transfer may also be necessitated by a mortgage servicer’s failure to meet contractual requirements. Servicing transfer requests may also be initiated by the owner of the MSRs or the servicer of the mortgage portfolio. For example, changes in capital regulations or servicing profitability may prompt commercial banks and financial services companies to seek to reduce MSR holdings. Some non-bank mortgage servicing companies have recently increased acquisitions of MSRs and the servicing of mortgage loans.

There are different variations for structuring transfers to the acquiring entities. Historically, both the ownership of the MSRs and the servicing of the mortgage loans were transferred to the same entity. However, the MSRs owner and the mortgage AB 2014-06 (June 11, 2014) Public servicer may be separate entities, which would necessitate one or more sub-servicer arrangements. For example, the MSRs owner may be established as a limited liability company with the primary purpose of sub-contracting servicing to one or more servicers. In some situations, more than one entity is responsible for the representations and warranties related to the origination, selling, or servicing of a transferred mortgage servicing portfolio. Different types of entities involved in MSR holding structures can impact the financial, operational, and legal risks associated with any given transfer.

Any sale and transfer of MSRs or transfer of the operational aspect of servicing mortgage loans owned or guaranteed by Fannie Mae or Freddie Mac requires the approval of the applicable Enterprise in accordance with its seller/servicer guide.

​An Enterprise should only approve those transactions that are consistent with sound business practice, aligned with the Enterprise’s board-approved risk appetite, and in compliance with regulatory and Conservator requirements. Certain bulk servicing transfers also require the approval of FHFA as Conservator for the Enterprises.​

Each Enterprise should have in place policies and procedures within its risk management program for evaluating risks of proposed sales or transfers of MSRs and transfers of the servicing of mortgage loans, considering the particular circumstances of the transfers (e.g., volume and profile of the loans transferred, structure and complexity of the transaction, counterparty exposure, servicing concentrations, and/or borrower experience). The Enterprise’s policies and procedures should identify, assess, and appropriately mitigate risk. The policies and procedures should provide for risk-based periodic reporting to the board of the transfers’ risk effect on the mortgage servicing portfolio. The Enterprise should maintain documentation of supporting analysis of transfer approval decisions that is sufficient to enable subsequent supervisory review.

​This advisory bulletin sets forth guidance for how each Enterprise should develop policies and procedures for reviewing and approving the sale and transfer of MSRs or the transfer of the servicing of mortgage loans. The policies and procedures should enable the Enterprise to understand its potential counterparty risk exposure resulting from servicing transfers.

​Analysis of Mortgage Servicing Transfers

The Enterprise should analyze and document the terms and conditions of all proposed transactions. The Enterprise should evaluate the risks and potential benefits of proposed transfers, taking into account relevant factors regarding the transferee, the transferor, and the borrower, as well as, the Enterprise’s overall risk management strategy for servicers. The analysis should incorporate and reflect the views of both risk management and business line management.

The analysis should reflect a risk-based approach and consideration of all relevant risks, including (but not limited to) the following factors:

Financial Risk Factors

  • Financial strength of the transferee servicer or the MSRs owner based upon a current analysis;
  • Existing and anticipated sources of capital and liquidity for the transferee servicer or the MSRs owner;
  • Confirmation of the responsible party(ies) for origination and servicing representation and warranty obligations;
  • Ability of all relevant participants to meet contractual obligations, including representations and warranties and other contractual obligations, including during adverse scenarios in which the counterparty may have trouble accessing liquidity and capital;
  • Terms of any financial support arrangements (e.g., letters of credit, net worth or other guarantees, or other investment structures that securitize the servicing income or the advance receivables); and
  • Complexity of the counterparty financial structure, including financial arrangements with other parties.

​Operational Risk Factors

  • The Enterprise’s, the transferee’s, and the transferor’s business objective for the proposed transfer;
  • Transferee servicer’s status as an “approved” servicer by the Enterprise;
  • Transferee servicer’s and any sub-servicer’s delegations and authority to conduct business on behalf of the Enterprise in relation to the servicing portfolio being transferred;
  • Organizational structure, location, management team, and operations of the transferee servicer and any sub-servicers;
  • Transferee servicer’s and any sub-servicer’s expertise and performance record, including the results of recently conducted Enterprise on-site reviews;
  • Servicing fee distribution between the MSRs owner and the transferee servicer to ensure proper alignment of incentives and coverage of costs;
  • Servicer capacity, taking into account staffing, facilities, information technology systems, and any sub-servicing arrangements;
  • Outstanding obligations and past performance regarding repurchase recoveries and compensatory fee recoveries;
  • Operational complexity of the transaction;
  • Third party service providers or vendors contractually obligated to the servicer, but not to the Enterprise;
  • Adequacy of the transferee servicer’s business continuity plan, inclusive of any applicable sub-servicers or material vendors;
  • Current and potential effects of the transfer on borrowers, including those associated with in-process workouts, bankruptcies, and litigation; and
  • Overall effect of the transfer on the servicer relationship and any resulting counterparty concentrations for an Enterprise.

Legal and Compliance Risk Factors

  • Potential compliance risk associated with the characteristics of the mortgage loans being serviced;
  • Based upon publicly available information, the transferor servicer’s, transferee servicer’s, and any sub-servicer’s record of compliance with consumer protection laws, including provisions of the Consumer Financial Protection Bureau’s Regulation X, which implements the Real Estate Settlement Procedures Act;
  • Extent to which the transferor servicer, transferee servicer, and any sub-servicer is subject to federal or state regulatory oversight; and
  • Any public regulatory or other enforcement actions relating to safety and soundness, legal, or compliance issues (e.g., consumer compliance, fraud, financial reporting) of the servicers or sub-servicers.

Policies and procedures should be consistent with prudent counterparty risk management practices and with FHFA guidance, including risk-based contingency planning in accordance with FHFA Advisory Bulletin AB-2013-01, Contingency Planning for High-Risk or High-Volume Counterparties, as appropriate.

Transfer Execution Monitoring

The Enterprise’s policies and procedures should clearly outline its expectations to facilitate the transfer of data and records. Further, the Enterprise should have a risk-based process to monitor the execution of the transfers so that all servicing transfers occur in a timely manner and in accordance with approved terms, servicing guide requirements, and applicable mortgage servicing transfer-related laws and regulations. The Enterprise should also have a process to update and maintain its systems to accurately identify all parties involved in the servicing of a particular loan portfolio.

Monitoring should cover the transfer of loan records, information regarding loans with loss mitigation in process (including loan modifications), compliance with laws and regulations relating to mortgage servicing transfers, compliance with approved terms including loan product types and status of loans to be transferred, and quality control review results. For loans that are subject to existing loss mitigation agreements or have loan modification agreements in process, the transfer terms should require the transferee servicer to honor and abide by such agreements or propose options that are no less beneficial to the borrower, and provide for the transferee servicer to obtain all information needed to complete the modification. Transfer execution monitoring should encompass consideration of all relevant participants, including the MSRs owners, servicers, sub-servicers, and third party service providers and vendors, as appropriate.

Policies and procedures for Enterprise approval determinations should incorporate assessments of the effectiveness of any prior transfers. Transfer execution monitoring AB 2014-06 (June 11, 2014) Public​ should continue for a sufficient period of time post-transfer to enable the Enterprise to evaluate the effectiveness of the transfer and incorporate that evaluation in future approval decisions.

​Related Guidance

​​Contingency Planning for High-Risk or High-Volume Counterparties, Federal Housing Finance Agency Advisory Bulletin 2013-01, April 1, 2013, establishes guidelines for contingency plans for high-risk or high-volume counterparties and describes the criteria the regulated entities should use to develop plans for managing counterparty credit risk exposures.

Want to Subscribe?

Federal Housing Finance Agency Text

© 2024 Federal Housing Finance Agency

Manage my existing loan

Log in to my account

New to Pennymac? Register to create an account

Apply for a new loan

Log in to my application

placeholder

Explaining the Home Loan Process Part 6: Loan Service Transfer

transfer of mortgage servicing rights

Tell me more! I'm looking to …

Buy a Home Refinance My Loan Access Home Equity

Earn cash back after close!

With Home Connect, you could earn $350 to $9,500 cash back after close.

You have completed every step of the mortgage process: from the application to underwriting to closing, you have secured your home loan and made the purchase you’ve been waiting for. However, borrowers often don’t realize that mortgage closing isn’t the end of the home loan process. Loans are commonly transferred to other companies for servicing—sometimes even before the first payment is made!

In this post, the final segment of our Explaining the Home Loan Process series, we’ll cover loan servicing transfer.

Transfer of loan servicing is no reason to panic. In fact, it’s quite common in the mortgage industry for loan servicing to be transferred from your initial lender to another company. While it may not be cause for concern, it’s important for you to understand your rights as a borrower and what to expect during (and after) the transfer.

Definition: Transfer of Loan Servicing

When your lender transfers servicing, they hand over the management of your loan to a new mortgage or servicing company. For the borrower, all this means is a new institution will be collecting your payments, handling your escrow accounts, dealing with any insurance or tax matters, and answering your questions.

This transaction will not impact your initial mortgage agreement in any way. Your loan amount, interest rate, contractual payment obligation and payment schedule will remain the same. The only change as a result of this transfer will be where you send your monthly mortgage payment.

This transfer could take place at any time during the life of your loan. In some cases, loan servicing can be transferred right after closing—even before a payment is made. Under the Real Estate Settlement Procedures Act (RESPA), lenders are typically required to provide certain disclosures during the mortgage process. This includes a Mortgage Servicing Disclosure Statement, which explains whether the lender intends to service the loan or transfer servicing to another company.

Notice of Transfer of Loan Servicing

When the servicing of your loan is being transferred, you should receive two notices in the mail:

  • A letter from your current servicer, which should be provided at least 15 days before the effective date of the transfer, commonly referred to as a “goodbye” letter.
  • A letter from your new servicer, which should be provided within 15 days of the effective date of the transfer, commonly referred to as a “hello” letter.

Both documents will contain information regarding the impending transfer, including the name, location, and phone number of the new mortgage company. The welcome letter from your new loan servicer will also include where and when you should begin sending your monthly payment. Each letter will also provide a statement explaining your rights and what to do if you have any questions or complaints about the servicing of your loan.

Avoid Loan Servicing Transfer Scams

In very rare cases, borrowers may receive a single letter indicating the transfer of loan servicing. If you only receive one letter, it should represent both sides of the servicing equation; it should include the ‘goodbye’ from your current servicer and the ‘welcome’ from your new servicer.

However, beware if you only receive a welcome letter. This could be a mortgage scam, designed by a thief who is posing as a new loan servicer to collect your monthly payments.

To avoid scams, always double-check with your current servicer. Upon receiving any notice of transfer in the mail, call your current servicer to certify your loan servicing is truly being transferred before sending any monthly payments to a new company.

Grace Period & Borrower Protections

The switch between loan servicers should be relatively smooth. But in case of any confusion, RESPA grants homeowners a 60-day grace period for 60 days from the date your loan servicing transfers, your new servicer cannot charge you a late fee or treat the payment as late if you sent it to your previous servicer on time or within the applicable grace period. This protects mortgage holders who may send their mortgage payments to their old servicers accidentally. It also serves as a cushion for borrowers who need to reroute automatic electronic payments to their new servicer's address.

Checklist: Loan Servicing Transfer

Most borrowers will undergo a transfer of loan servicing at least once during homeownership. To help you better navigate the transfer, follow the checklist below:

Watch for two notices in the mail

Be certain you receive both a goodbye letter (from your old servicer) and a welcome letter (from your new servicer). If you do not receive both notices, call your old servicer to verify the transfer.

Reroute your mortgage payments

If you pay your mortgage using automatic electronic payments, be sure to reroute your payments to the new company. If you send checks every month, ensure you send your next check to new servicer at the address listed in the welcome letter.

Review homeowners insurance policy

Your loan servicer will likely notify your homeowners insurance carrier that your loan has transferred to new servicer. Make sure to review your next policy renewal notice to verify that the change has been made. If the policy hasn't been updated, contact your insurance company to ensure they update your loan servicing information.

Double-check they have your information right

Double-check that the mortgage account information listed on both notices is correct. It is important to clear up any mistakes sooner rather than later, as they can affect your future mortgage payments.

Moving Forward With Your New Lender

Once your transfer is complete, you shouldn’t notice any changes with your mortgage—other than where you send your monthly payments. As mentioned above, transferring the servicing of a loan is rather common so it is possible that your loan servicing could be transferred again in the future.

If you have questions during the transfer process, don’t hesitate to ask your new servicer. Your loan servicer is there to help you and they want to make your life as a mortgage holder as simple as possible.

If your mortgage has been transferred to Pennymac, contact a Pennymac Customer Service Representative today. Our highly trained staff will answer any questions you may have on loan servicing or any other portion of the mortgage process.

Explore the Home Loan Process in Further Detail

To learn more about the other typical steps in obtaining a mortgage, take a look at the previous sections of our Explaining the Home Loan Process series:

  • Part 1 - Getting Prepared for the Home Loan Process
  • Part 2 - Completing a Home Loan Application
  • Part 3 - Understanding Loan Processing
  • Part 4 - Explaining the Mortgage Underwriting Process
  • Part 5 - The Mortgage Closing Process
Jump to... Part 1 - Getting Prepared for the Home Loan Process Part 2 - Completing a Home Loan Application Part 3 - Understanding Loan Processing Part 4 - Explaining the Mortgage Underwriting Process Part 5 - The Mortgage Closing Process Part 6 - Transfer of Loan Servicing

servicing loan process fundamentals

Want to stay in the know about today's interest rates? Sign up for emails and get updates directly in your inbox!

Your info has been received.

Thanks for signing up for Pennymac updates! If you have any questions about our rates, mortgages, etc., you can always call us at 866.549.3583 .

Sorry, but something went wrong

Please refresh the page and try again. Or if you have any questions about our rates, mortgages, etc., you can always call us at 866.549.3583 .

Related articles

Why Was My Mortgage Sold to Another Company?

Learn why mortgages are sold, what that means for your loan, your rights and responsibilities and how to ensure your loan remains in good standing.

October 10, 2017

Understanding the Role of Mortgage Impound Accounts

Not sure how impound escrow affects your mortgage? Learn the purpose of impound escrow, and how it’s designed to simplify the loan repayment process.

July 19, 2017

Looking at a modern style home

What Are Mortgage Servicing Rights?

Andrew Paniello

Andrew is a freelance writer with nearly a decade of experience. His primary areas of interest include financial, real estate, and macroeconomic topics. In addition to working in the financial planning and real estate sectors, Andrew has also earned degrees in finance and political science from the University of Colorado.

Ready To Buy a Home?

Get Approved to Buy a Home

Rocket Mortgage ® lets you get to house hunting sooner.

Equal Housing Opportunity Logo

Rocket Mortgage, LLC has a business relationship with LMB OpCo LLC d/b/a Core Digital Media, who is the owner of MoneyTips.com. The nature of the relationship is Rocket Mortgage, LLC, and LMB OpCo LLC are owned, directly and indirectly respectively, by RKT Holdings, LLC.

Mortgages can last for 10, 15 or 30 years. Naturally, this creates ongoing responsibilities for both the borrower and the lender. If a mortgage is active, it will need to be continually serviced, and the process often contains a lot of moving parts.

While one mortgage lender will want to manage your mortgage loan for the length of your loan term, other mortgage lenders will want to pass the loan servicing responsibilities on to someone else. There’s nothing wrong with this. In fact, it can help make your mortgage easier to manage if it’s placed with a reliable mortgage servicer.

In this article, we will discuss the most important things you need to know about mortgage servicing rights, including how these rights work and how the sale of mortgage servicing rights (MSR) from one company to another might affect the borrower.

What Is the Definition of Mortgage Servicing Rights (MSR)?

The term “mortgage servicing rights” describes the legal right of a company to service a mortgage monthly and enjoy the financial benefits of doing so.

Several different responsibilities come with servicing a mortgage. In many cases, when mortgage servicing rights are transferred from one party to another, they will transfer all rights. In other cases, only some of these rights will be transferred.

The responsibilities involved when servicing a mortgage can include but are not limited to:

  • Sending statements and collecting payments: Lenders want to ensure they get paid on a timely basis. Which is why they need to communicate when the borrower’s mortgage is due, what their payment will be and facilitate the collection of the payments.
  • Allocating principal and interest to payments: With every mortgage payment, part of the payment goes to paying down principal and part goes to interest. These portions change over time, and it is important to have a loan servicer that can keep track of and administer these changes.
  • Managing mortgage insurance fees and property taxes: With most mortgages, property taxes and homeowner’s insurance will be added directly to the monthly payment. This means the servicer will need to ensure both the insurance provider and all taxing authorities are paid on time.
  • Taking care of escrow funds: Escrow funds are used to pay the various costs associated with the mortgage, including the property taxes, homeowners and mortgage insurance and other possible expenses.

There may be other tasks included in the agreement, which should all be specifically outlined and identified.

Why Do Lenders Outsource Their Mortgage Servicing Rights?

All mortgages begin with an originator, typically a bank, credit union or online lender. Mortgage lenders make it possible for you to buy a home, and, in exchange, a mortgage lender can make a profit from your mortgage. Let’s assume that you take out a 30-year fixed-rate mortgage for $200,000 at 5% interest.

After issuing the mortgage, lenders will make money from:

  • Origination and other fees: Lenders usually charge an origination fee of 0.5% – 1% or more of the loan value for their services. For our $200,000 mortgage, that’s $1,000 at minimum before you make a single payment.
  • Principal and interest: If the lender holds onto your mortgage, they collect the principal and interest that you pay them every month. For your $200,000 mortgage, the monthly payment would be $1,073.64 or $12,883.68 per year. At the end of the first year, the lender would collect $9,932.99 in interest and $2,950.73 would go toward the principal.
  • Selling the mortgage: Lenders don’t like to keep debt on their books for too long. That’s why they usually package your mortgage with thousands of others to be placed into mortgage-backed securities (MBS) . The lenders get a lump sum payment for your mortgage and the aggregators like Fannie Mae and Freddie Mac collect the money that you pay each month toward your mortgage. By selling your mortgage, the lender frees up enough money to offer someone else a mortgage and the cycle continues.

Once they’ve made the money from the origination fees or selling your mortgage, it’s a lot of work to stay on top of your mortgage and many mortgage originators don’t have the bandwidth to deal with it.

If the original lender no longer wants to handle the ongoing responsibilities of servicing the mortgage, that lender might pass the mortgage servicing rights to a third party.

At this point, the original lender will still be the primary holder of the mortgage, but the third-party company will perform all mortgage upkeep duties in exchange for a predetermined fee.

This creates a secondary market for servicing a mortgage. Currently, servicing a mortgage is estimated to be worth up to $250 per month for every $100,000 of the outstanding mortgage balance. [1]

How Do Mortgage Servicing Rights Work?

Here’s an example of how mortgage servicing rights work for the lender and the mortgage servicer.

If we use our $200,000 mortgage example from before, the monthly mortgage payment is $1,073 a month and the servicing rights are about $500.

Even if the lender has to pay the mortgage servicer $500 every month, they still get to keep $573 of your mortgage payment without breaking a sweat.

And when mortgage servicers are processing thousands – or even tens of thousands – of mortgage payments every month, these seemingly small servicing responsibilities can quickly begin to add up.

How much is that worth to the mortgage servicing company? Let’s say a servicing company is responsible for servicing 2,000 mortgages with an average value of $200,000 each. That’s $500 per month per mortgage; so the monthly income from the fees could easily exceed $1 million.

Who Owns Your Mortgage Anyway?

The transfer of mortgage servicing rights from the loan originator to a professional mortgage servicer can be mutually beneficial for all parties involved. From the lender’s perspective, they will no longer need to worry about handling any mortgage servicing responsibilities, which can be both time-consuming and expensive.

And the market for mortgage servicing rights is active. Sometimes the mortgage servicing rights for your mortgage will be transferred right after the mortgage is issued. Other times, the decision will be made later on.

There is no limit to how many times MSR can be transferred from one party to another, and it is not uncommon for these transfers to occur multiple times over a mortgage’s term.

When a transfer does occur, the party initiating the transfer will be required, by law, to notify the borrower. In some cases, this might change who you make your monthly mortgage payments to, though that is not always the case.

Getting a Loan and Paying a Loan May Take More Than One Company

Mortgages typically represent a multi-decade commitment and will involve hundreds of thousands of dollars. This creates a lot of moving pieces in the fast-changing mortgage industry. It is not uncommon for lenders or mortgage originators to pass the responsibility of servicing mortgages to a third party. When done correctly, this can benefit all parties involved.

Need Mortgage Help?

New home, second home, refinancing, we’ve seen it all. Whatever your goals, expert help is just a click away.

Share Article

The Short Version

  • The term “mortgage servicing rights” describes the legal right of a company to service a mortgage monthly and enjoy the financial benefits of doing so
  • Currently, servicing a mortgage is estimated to be worth up to $250 per month for every $100,000 of the outstanding mortgage balance [1]
  • Mortgage servicing can include collecting and processing payments, distributing the components of the payment to the right accounts and managing the escrow payments

On This Page Jump to Close

Congressional Research Service. “ Mortgage Servicing Rights and Selected Market Developments. ” Retrieved May 2022 from https://crsreports.congress.gov/product/pdf/IN/IN11377

You Should Also Check Out…

Money Rolls

  • Search Search Please fill out this field.

What Is a Transfer of Mortgage?

How a transfer of mortgage works, special considerations for transfer of mortgage, the bottom line.

  • Personal Finance

Transfer of Mortgage: What it Is and How it Works

Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia.

transfer of mortgage servicing rights

Lea Uradu, J.D. is a Maryland State Registered Tax Preparer, State Certified Notary Public, Certified VITA Tax Preparer, IRS Annual Filing Season Program Participant, and Tax Writer.

transfer of mortgage servicing rights

Transfer of mortgage is a transaction where either the borrower or lender assigns an existing mortgage (a loan to purchase a property—usually a residential one—using the property as collateral) from the current holder to another person or entity.

Homeowners who are unable to keep current on their mortgage payments may seek a transfer so that they do not default and go into foreclosure. However, not every mortgage is transferable. Here's how a transfer of mortgage works, and how to tell if your mortgage allows this strategy.

key takeaways

  • A transfer of mortgage is the reassignment of an existing mortgage from the current holder to another person or entity.
  • Not all mortgages can be transferred to another person.
  • If a mortgage can be transferred, the lender has the right to approve the person assuming the loan.
  • Many mortgage lenders often include a due-on-sale clause in their loans that prohibits a home seller transferring a mortgage to a buyer.

A transfer of mortgage lets a buyer take over the current homeowner's mortgage, assuming the same terms and conditions as they take over responsibility for payments. If your mortgage allows it, this strategy can help you avoid foreclosure, but it can have advantages for the new mortgage owner as well.

For one, the new mortgage owner may want to take on an older mortgage because such a transfer could let them take advantage of previous interest rates if they are lower than the current market rates. Although the new mortgage owner may have to undergo a credit check by the lender. .

A transfer of the mortgage, if completed successfully without challenge or stipulations, would not change the terms or length of the loan. The new mortgage owner would only be responsible for the remaining outstanding balance. Through a transfer of the mortgage, a buyer might also avoid having to pay closing costs associated with a new mortgage.

Many mortgages are not eligible for transfer . Mortgages that are eligible are considered "assumable." In order to transfer a mortgage, the mortgage lender will typically need to verify that the person or entity that will assume the loan has adequate income and credit history to be able to make payments in a timely manner.

If you are not allowed to transfer a mortgage due to the loan's underwriting, you may need to explore other options to avoid foreclosure . For example, you could work with your lender to see if they will agree to other payment arrangements, such as a temporary suspension of your payment obligation.

Another option to avoid foreclosure is to sell the home and have a potential buyer, colleague, family member, or another entity agree to make up any difference between the home's sale price and the unpaid loan balance.

Lenders who want to deter a transfer of mortgage might include a clause in the mortgage that requires the remaining balance of the loan to be due on the sale of the property.

This due on sale clause ensures that when homeowners sell their houses, they cannot transfer the mortgage to the buyer (which could play a key part in a homebuyer's making an offer, especially if the mortgage interest was lower than the current market rates). These clauses in effect require the seller to repay the full outstanding balance on the loan, perhaps with the sale proceeds, and likewise compel the buyer to take out a new mortgage to make the purchase.

Under the 1982 Garn-St. Germain Act , lenders cannot enforce the due-on-sale clause in certain situations even if ownership has changed.

You can potentially avoid triggering a due-on-sale clause by transferring the mortgage to an immediate family member, or to a spouse from whom one is legally separated or divorced.

Further, the transfer may be a result of an inheritance following the death of the borrower, and the family member is moving into the home. In such an instance, the lender might not have grounds to prevent the transfer of the mortgage. If the property is transferred to a living trust and the borrower is the trust’s beneficiary , the mortgage usually can also be transferred as well.

Can You Add a Co-Borrower to Your Mortgage?

Once you have a mortgage on your own, you cannot add a co-borrower without refinancing the loan. Many mortgage lenders allow co-borrowers, but some may not. The requirements for a home loan will vary by lender.

What Types of Mortgages are Assumable Mortgages?

Assumable mortgages that can be transferred to another person or entity may include Federal Housing Authority (FHA) loans, U.S. Department of Agriculture (USDA) loans, and Veterans Affairs (VA) loans. Conventional mortgages backed by Freddie Mac or Fannie Mae are generally not assumable.

What Is an Unofficial Transfer?

An unofficial transfer is not a legal arrangement. In this case, the original homeowner continues to make payments to their mortgage lender, but they receive payments from another party to help them make the payments.

Whether you can transfer a mortgage to another party will depend on what type of mortgage you have and the lender's standards. Most conventional mortgages backed by Fannie Mae and Freddie Mac are not eligible for mortgage transfers. Before you go forward with this strategy of avoiding foreclosure, consider alternatives such as working with your lender or requesting forbearance.

U.S. Department of Housing and Urban Development. " Assumptions ."

Congress.gov. " H.R.6267 - Garn-St. Germain Depository Institutions Act of 1982 ."

United States Department of Agriculture. " Chapter 2 - Overview of Section 502 ."

transfer of mortgage servicing rights

  • Terms of Service
  • Editorial Policy
  • Privacy Policy
  • Your Privacy Choices

Home

  • Recently Active
  • Top Discussions
  • Best Content

By Industry

  • Investment Banking
  • Private Equity
  • Hedge Funds
  • Real Estate
  • Venture Capital
  • Asset Management
  • Equity Research
  • Investing, Markets Forum
  • Business School
  • Fashion Advice
  • Technical Skills
  • Trading & Investing Guides

Mortgage Servicing Rights (MSR)

A contractual agreement that gives the right to service an already-existing mortgage.

Imran Husain

Prior to becoming our CEO & Founder at Wall Street Oasis, Patrick spent three years as a Private Equity  Associate for Tailwind Capital  in New York and two years as an Investment Banking Analyst at Rothschild.

Patrick has an  MBA  in Entrepreneurial Management from The Wharton School and a BA in Economics from Williams College.

What Are Mortgage Servicing Rights (MSR)?

  • History Of MSRs
  • Impact Of Interest Rates On MSR
  • Impact Of Housing Market Fluctuations On MSR

Outsourcing Mortgage Servicing Rights

  • What MSR Means For Borrowers

Mortgage Servicing Rights Example

  • Companies That Purchase Mortgage Servicing Rights

Mortgage Servicing Rights (MSR) FAQs

Mortgage Servicing Rights (MSR) refers to a contractual agreement that gives the right to service an already-existing mortgage. 

Usually, such an agreement is bought by the mortgage company, most commonly a major financial institution such as a bank or a third party that owns resources that allow it to service the mortgage.

Purchasing the rights to service a mortgage means that the servicer may need to handle the following tasks:

  • Administrative duties to manage loan
  • Collect monthly mortgage payments and other dues
  • Ensure that a mortgage lender receives dues
  • Tackling complex borrowers and missed payments
  • Set aside taxes and insurance premiums in an escrow for management
  • Forward principal and interest payments to the lender
  • Other debt management duties 

Hence, the responsibilities that the servicer is tasked with are routine loan management duties. For the servicer's work, the fee charged to the lender ranges from 0.25% to 0.5% of the mortgage balance.

History of MSRs

The mortgage servicing rights (MSR) market has seen many changes. This section will highlight some of these developments and their implications.

In 2011, the Federal Reserve and the OCC took action against several major financial institutions by mandating improvements to servicing practices. The OCC, in particular, took  steps  to identify and address unsafe and unsound foreclosure practices.

This development meant that banks faced regulatory issues when handling their non-performing loans. 

However, nonbank servicers were willing to handle these loans because of their cost and technological advantages. Therefore, banks increasingly outsourced the servicing of these assets.

Moreover, during this time, Fannie Mae introduced the “ High Touch Servicing Program ,” which made it simpler to facilitate the transfer of non-performing assets from banks to servicing companies.

In 2013, the Internal Revenue Service (IRS) issued a Private Letter Ruling (PRL) that incentivized REITs to invest cash flows into MRS instruments. 

The PRL made it possible for some instruments to qualify as assets for REITs to hold and invest in, encouraging them to invest in MSR.

In January 2014, new servicing standards were set by the  Consumer Financial Protection Bureau (CFPB) . These requirements applied to banking institutions and special servicers with assets over $10 billion. The standards are meant to protect consumers.

Today, the mortgage servicing market (MSR) and its corresponding financial instruments continue to gain popularity. As interest rates are rising in today's economy , we find that the MSR market stands to achieve for the foreseeable future.

Impact of Interest Rates on MSR

Several reasons exist for determining the performance of MSR instruments. Today, the market for these instruments is strong because of much safer loan originations after 2008, reducing the risk of defaults. 

Historically, the value for such instruments has risen as interest rates increase and, conversely, has fallen when interest rates decrease. 

This directly proportional relationship holds because the likelihood of a borrower paying off the mortgage faster, i.e., making prepayments, falls as interest rates rise.

This phenomenon was observed recently as rising interest pains continue to devastate the industry; the MSR market stands out as it thrives in this environment, as reported in this  article .

This relationship means that the servicing company will receive mortgage fees for a longer time as interest rates rise and prepayments fall.

Moreover, about interest rates, as interest rates rise, borrowing costs rise, and thus, individuals and firms have an incentive against borrowing capital. 

Therefore, to some extent, in such an environment, the servicing firm will have a lower pool of public debt that can be serviced. 

This means servicing firms can face downward pressure on the commission due to an increasingly competitive environment. 

Impact of Housing Market Fluctuations on MSR

Housing market fluctuations can directly impact the stability of the servicing industry. For instance, consider the scenario of the 2008 financial crisis , where real estate saw a sharp downturn with innumerable defaults on payments. 

In such an environment, servicing firms face pressure, as the debt they are servicing faces a much higher default risk. Ultimately, this causes the firm's stability and the industry to decrease.

Moreover, the clients of servicing firms, usually big banks, face a financial crunch in this challenging environment. Thus, the servicing firm must navigate many challenges in such a hypothetical scenario.

When the housing market is strong, the public mortgage debt outstanding increases, as individuals and firms need more capital to purchase real estate. Therefore, servicing firms may capitalize in such an environment by raising commissions due to an optimistic atmosphere.

Although the risks mentioned above exist for the MSR market, mortgages and MSRs are still popular among Real Estate Investment Trusts (REITs), hedge funds, banks, and retail instruments because of the stable cash flow yields. 

Lenders incur costs when mortgage servicing rights are outsourced, as the servicing firm requires a fee for providing such services. Therefore, lenders need to analyze whether the commission charged by a servicing firm is worth it.

Several factors cause lenders to outsource such services. This may include:

  • Managing surges in loan requests
  • Freeing up existing resources for allocation to income-producing activities, such as evaluating the credit-worthiness of borrowers, instead of managing existing debt
  • In many cases, it can be more cost-efficient to outsource mortgage servicing to third parties, as they specialize resources in the space.
  • Frees up lines of credits

Perhaps the most crucial reason lenders have a solid incentive to outsource servicing duties that the lender can focus its resources on its core business, including issuing new mortgages and working with borrowers. 

Moreover, the lending firm can cut costs on servicing duties and focus capital on the core business of the lending firm, which, again, is initiating and approving mortgages for credit-worthy individuals.

Due to the reasons above, the lending industry has increasingly shifted to outsourcing servicing to third-party firms. 

This is evident from the chart below, which shows a sharp fall in the pool of debt serviced by banking institutions. This implies that the debt is serviced by servicing firms and some non-bank lending firms.

transfer of mortgage servicing rights

Lenders do not legally need to ask for permission from the borrower to transfer servicing rights. Even so, the lender needs to step in when a complicated situation arises, such as when a borrower cannot make payments and is not complying with the agreement.

Therefore, lenders find it profitable to pass mortgage servicing rights to a third party, usually saving costs, and experience the added benefit of not worrying about servicing the debt.

What MSR Means for Borrowers

For the mortgage borrower, nothing about their loans changes except that a third party handles the administrative duties and loan management. So as far as the borrower is concerned, they are dealing with a different party when inquiring about their loan.

This means that the loan amount, interest rate , monthly payment, total payable amount, and other factors are the same as before.

Thus, it is imperative to understand that lenders recognize that borrowers do not usually have much preference when dealing with a third party or their lender when making payments. 

Federal banking laws today allow lenders to sell mortgage servicing rights or transfer them to another party without the borrower's consent. However, in case of a transfer or sale, the borrower shall be notified fifteen days before the changes.

Borrowers may sometimes encounter issues with the third party servicing their mortgage. In such an instance, a complaint should be filed with the  Consumer Finance Protection Bureau . 

If you have a student loan, you can make a query to the  Federal Student Aid Office of the Department of Education . A suspected fraud case can be reported to the  Federal Trade Commission (FTC) .

Consider the following example of a lender firm selling its mortgage servicing rights to a third-party firm specializing in such operations. 

Here are some pieces of information associated with this example:

  • The lending firm has decided to service 40% of its receivables (mortgage payments), which amounts to $20 million.
  • The debt is expected to be paid off at an average of 35 years; therefore, the yearly payments that are collectible amount to about $571,428 ($20 million/35), on average.
  • The cost of servicing this debt, charged by the servicing firm, is 0.25% of the total mortgage amount; this amounts to $500,000 

Given the above information, the lending firm, usually a bank, can outsource its duties to a third-party firm for a fee. 

As discussed before, sometimes, it may make economic sense for the lending firm to hire a specialized firm to complete such tasks, as they can achieve it at a lower cost per unit.

For the borrowers that owe the $20 million, nothing has changed except for the address to which payments are routed and the party dealing with difficulties. 

Such an example illustrates the benefit that both servicing firms and lenders stand to gain in such a deal. Further, usually, borrowers barely experience any difference through such a process.

Companies That Purchase Mortgage Servicing Rights 

Several firms specialize in providing services that manage mortgages. Some examples include:

Wells Fargo & Co (NYSE: WFC), one of t he major financial services institutions, offers a variety of services, including commercial mortgage servicing, acting as the number one primary and master servicer of commercial real estate loans by volume in the U.S., according to the  Mortgage Bankers Association (MBA)  in 2020.

Flagstar Bancorp Inc (NYSE: FBC)  is a banking company that is also one of the largest residential mortgage servicers in the U.S.

KeyBank  is a retail banking company that is the primary subsidiary of  KeyCorp (NYSE: KEY)  and is one of the  top commercial mortgage servicers in the U.S .

Midland Loan Services , a  PNC Real Estate  Business, is one of the largest third-party providers of loan servicing for commercial loans and other retail real estate industry solutions.

Berkadia Commercial Mortgage LLC  is one of the  largest  commercial loan servicers.

CBRE Loan Services , a firm specializing in servicing loans and asset management , provides services in the U.S, Europe, and the Asia Pacific.

Nelnet, Inc (NYSE: NNI) , a provider of student Loan and education financial servicing

Altisource Portfolio Solutions (NASDAQ: ASPS) , a real estate loan and mortgage servicer

Ocwen Financial Corp (NYSE: OCN) , a commercial and residential mortgage servicer

As mentioned before, the firms above manage mortgages for mortgage lenders. In exchange for servicing the mortgages, they receive a commission without even owning mortgages.

Usually, mortgage servicing firms are backed by government agencies/enterprises such as Ginnie Mae, Fannie Mae, and Freddie Mac .

Mortgage servicing rights are traded on a separate market. Usually, such rights are bundled up into securities. Thus, they allow investors to own bunches of servicing requests that generate consistent payouts.

Yes, mortgage servicing rights are an intangible asset, as the servicing fees collected to compensate for the servicing facilities are non-tangible. This includes collecting dues on time and dealing with delinquent tenants.

A lender can be identified as a financial institution or individual that provides a borrower with capital for interest. However, a loan servicer is an entity that manages the loan payments and works with the borrower to ensure that payments are timely made. 

Therefore, a lender may also be the servicer of a loan. Although today, this is becoming increasingly less common.

Usually, this is not the case, as the servicer is interested in the borrower making payments on time to receive their fees for providing the lender with timely payments. 

However, a loan servicer may own your loan if the servicer is the lender. This is the case with large banks that service some percentage of their loans.

VBA Macros

Everything You Need To Master Financial Modeling

To Help You Thrive in the Most Prestigious Jobs on Wall Street.

Researched and authored by Imran Husain | LinkedIn

Free Resources

To continue learning and advancing your career, check out these additional helpful WSO resources:

  • Commodities
  • Nikkei Index
  • Penny Stock
  • Short-Term Investments
  • Small Cap Stock

transfer of mortgage servicing rights

Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.

or Want to Sign up with your social account?

The Federal Register

The daily journal of the united states government, request access.

Due to aggressive automated scraping of FederalRegister.gov and eCFR.gov, programmatic access to these sites is limited to access to our extensive developer APIs.

If you are human user receiving this message, we can add your IP address to a set of IPs that can access FederalRegister.gov & eCFR.gov; complete the CAPTCHA (bot test) below and click "Request Access". This process will be necessary for each IP address you wish to access the site from, requests are valid for approximately one quarter (three months) after which the process may need to be repeated.

An official website of the United States government.

If you want to request a wider IP range, first request access for your current IP, and then use the "Site Feedback" button found in the lower left-hand side to make the request.

What a balanced approach to non-bank mortgage servicing looks like

report on nonbank mortgage servicing.

The report's executive summary makes numerous points: independent mortgage banks play a "key role" in originating and servicing loans for underserved borrowers; IMBs now originate and service a majority of mortgage loans; Ginnie Mae and GSE securitizations make up an increasing share of the mortgage market; and IMBs rely on financing that can be repriced or canceled in times of financial stress.

a review of mortgage servicing is appropriate , given FSOC's statutory duties to monitor threats to our financial stability. We also appreciate that risk is framed in terms of large servicers, as CHLA continues to point out smaller servicers simply don't pose any systemic risk.

However, the Community Home Lenders of America takes issue with the following key conclusions in the FSOC Report,"the agencies and other credit guarantors could experience large losses, and there could be payment delays to stakeholders such as insurance companies and local governments."  

We have no idea how financial problems with single family mortgage servicers could lead to payment delays to local governments, and there is nothing in the report to back this claim up. Moreover, CHLA rejects the conclusion that there is a systemic risk of "large losses" to "the agencies and other credit guarantors."

Let's be clear, we are not talking about mortgage loan losses. The underlying mortgage loans are already federally guaranteed by FHA, RHS, and VA, and the GSEs. A servicer's financial problems don't change that. 

We understand the objective of avoiding servicing disruptions to consumers. We also understand that Ginnie Mae and Fannie and Freddie could be forced to arrange the transfer of servicing portfolios if servicers are unable to make required advances. However, we are confident that payments on Ginnie Mae, Fannie Mae, and Freddie Mac mortgage-backed securities will be made on time. These are the barometers of whether there is systemic risk, and why we think the report's concerns are exaggerated.

This is not like 2008, where Lehman Brothers collapsed because housing assets on their books plunged in value. IMBs may be struggling financially these days, but it is not because their assets are collapsing in value. The current IMB challenge is to right-size expenses to mortgage volume and revenue that have declined by over 50%.  The IMB business model, which is to originate and securitize or sell off loans to aggregators, protects them from significant write-downs of assets if mortgage markets were to decline. 

report on independent mortgage banks.  

If you have taken the time to read the FSOC report, we would also ask you to take the time to read our report, for a different perspective on these issues.

CHLA's other problem with the FSOC report is that it seems to talk about servicers in a vacuum. The main federal nexus is Ginnie Mae and Fannie and Freddie, and the percentage of mortgage loans that IMBs service that are not Ginnie Mae or GSE is miniscule. So, the focus should be on Ginnie Mae, Federal Housing Finance Agency supervision, and ways to strengthen certainty of MBS payments, not on undue alarms regarding IMBs.

The reality is when it comes to supervision and financial regulation of servicers, Ginnie Mae and FHFA (as regulator of Fannie Mae and Freddie Mac) are on the case. They should be left to do their job.  

Ginnie Mae modernization plan . Our goal with this plan is not to raise alarms, but to strengthen IMB servicers, to increase confidence among warehouse lenders, and to provide more liquidity in the system. The goal should be to promote mortgage access to credit, not shrink it through general alarms that undermine confidence in the system.

The top recommendation in CHLA's plan is to increase liquidity for IMB servicers, through development of a liquidity facility. In essence, Ginnie Mae requires IMB servicers to act as a banker to borrowers that miss their mortgage payment. So, a liquidity facility is appropriate.

expanded PTAP program , which FSOC recommended.  

The development of a liquidity facility would reduce risk, increase confidence among warehouse lenders, and give Ginnie additional tools to deal with issuer resolutions.

Another problem is funding. Despite the $15.744 billion in profits Ginnie Mae has generated for American taxpayers, Congress perpetually underfunds Ginnie Mae salaries and expenses. If federal policy makers are worried about mortgage servicing, re-investing an additional 1% of Ginnie Mae's massive yearly profits back into Ginnie Mae seems like a no brainer.

Ginnie Mae should also be treated like the sophisticated financial agency it is. Federal Deposit Insurance Corporation, FHFA and other financial federal agencies have the right to exceed the federal worker pay cap, in order to hire and retain high quality personnel. There is simply no reason Ginnie Mae does not have this same flexibility. Additionally, Ginnie Mae should have greater flexibility to quickly hire personnel and procure contracts at least in exigent circumstances such as a financial crisis or dealing with issuer resolutions.

Why is CHLA not as focused here on Fannie Mae and Freddie Mac? Because IMBs' role in servicing GSE MBS is much more limited than their role in servicing Ginnie Mae MBS. Many IMBs use the GSE cash window without retaining servicing. Where they retain servicing, advance responsibilities are lower, as they are less based on "scheduled" payments. Finally, Fannie and Freddie are consistently profitable and can easily make advances if a GSE servicer is unable to, these advances will ultimately be recouped when the borrower resumes payments or by the underlying GSE guarantee already in place. 

Finally, the FSOC Report recommends that, "Congress consider legislation to establish a fund financed by the nonbank mortgage servicing sector to provide liquidity to nonbank mortgage servicers that are in bankruptcy…"  

CHLA strongly opposes this idea. We do not support bailing out bankrupt servicers. Instead, we should proactively create more liquidity in the system, as we propose in CHLA's Ginnie Mae Plan.  

If there are Ginnie Mae costs from issuer resolutions, they should be absorbed by Ginnie's significant profits. If there are GSE costs from issuer resolutions, they should be absorbed by the GSEs' profits. Or better yet, by Congress taking the 10 basis point fee it imposed on all GSE borrowers to fund non-housing spending and re-directing it for this purpose. We don't need a new fee that will inevitably be passed along to homebuyers.

Minorities, veterans, and other underserved first-time homebuyers currently face unprecedented homeownership affordability challenges due to the double whammy of high mortgage rates and high home prices.  Higher fees are not the answer. Our focus should be on homeownership affordability, not on actions that restrict access to mortgage credit. 

Horton, who stepped back from an executive role at his company D.R. Horton in October, died suddenly on Thursday.

Donald Horton founder of D.R. Horton.jpg

A recommendation to give Ginnie Mae expanded authorities is drawing focus in the reactions to a Financial Stability Oversight Council report on nonbank risks.

ginnie mae word or concept represented by wooden letter tiles on a wooden table with glasses and a book

The April and May announcements from the U.S. government, down payment assistance firms and lenders on easing the homeownership affordability crunch.

Family Home Moving in: Happy and Excited Young Korean Couple Enter Newly Purchased Apartment. Beautiful Family Happily Embracing. Modern Home Ready for Decorations. Mortgage Loan, Investment Concept

Rohit Chopra, director of the Consumer Financial Protection Bureau, said Friday that the agency will be moving forward with rules and enforcement actions after the defeat of a Supreme Court challenge to the agency's constitutionality.

06-chopra-040221-topten.jpeg

Roam Boost eases the path for FHA and VA mortgages held by sellers to be assumed by the buyer.

Roam CEO

The House Financial Services Committee passed eleven bills, including a Democratic-sponsored bill on homeless veteran housing and a Republican-led package on bank regulation.

Andy Barr

  • HousingWire
  • Altos Research
  • Reverse Mortgage Daily
  • Newsletters
  • HousingWire Annual
  • Gathering of Eagles
  • Virtual Events

Popular Links

  • Mortgage Rates Center
  • Whitepapers
  • Marketing Solutions
  • We’re Hiring

vpjoebiden_hud2015

FSOC recommends more regulation and liquidity for nonbank servicers

Mortgage trade groups have varying opinions on the FSOC report, which states that nonbanks are key for underserved groups but are vulnerable to economic shocks

  • Click to share on Twitter (Opens in new window)
  • Click to share on Facebook (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to email a link to a friend (Opens in new window)
  • Click to share on SMS (Opens in new window)
  • Click to copy link (Opens in new window)

A recently published report by the  Financial Stability Oversight Council  (FSOC) identified vulnerabilities at  nonbank mortgage servicers that pose risks to financial stability. It recommended increased regulation and initiatives to improve these companies’ liquidity during moments of stress, but mortgage trade groups have different reactions to the proposals. 

The attention on nonbank mortgage companies have increased since their expansion following the financial crisis of the late 2000s. In 2022, they originated nearly two-thirds of mortgages, compared to 38% in 2008. Meanwhile, they owned servicing rights on 54% of mortgage balances in 2022, up from 4% in 2008. In addition, nonbanks represent seven of the 10 largest servicers of  Fannie Mae ,  Freddie Mac and  Ginnie Mae loans. 

The FSOC report, released on Friday, states that these companies quickly adapt their operations to market conditions, are early adopters of technology and are key for underserved borrower groups. But shocks to the mortgage market can deteriorate borrowers’ income, balance sheets and access to credit, affecting borrowers, government agencies, insurance companies and local governments. 

For example, nonbank mortgage servicers must make certain advances and their debt can be limited, repriced or even canceled in times of stress. If they need to transfer their portfolio due to a shock, it could be difficult to identify another servicer that is not impacted to take over, the report added. 

“We need further action to promote safe and sound operations, address liquidity risks, and enable continuity of servicing operations when a servicer fails,” U.S. Treasury Secretary Janet L. Yellen said in a prepared statement. 

The FSOC recommends that Congress should give the  Federal Housing Finance Agency  (FHFA) and Ginnie Mae additional authority to establish appropriate safety and soundness standards, directly examine counterparties, enforce compliance, and authorize Ginnie Mae and state regulators to share information, among other things. 

“Taken together, I believe these recommendations will reduce the risk of consumer harm or financial market contagion in the event of material financial stress at one or more nonbank mortgage servicers,” FHFA Director Sandra Thompson said in prepared remarks.  

But Bob Broeksmit, president and CEO of the  Mortgage Bankers Association (MBA), said that some of these recommendations are “unnecessary, as layering duplicative supervision requirements or supervisory entities onto a heavily regulated market will add significant cost and complexity.”

“Managing such changes, should Congress require them, could lead to reduced appetite for mortgage servicing assets. Reducing competition and credit availability while increasing borrowing costs is antithetical to regulators’ goals of a diverse and robust market for mortgage lending and servicing,” Broeksmit said in a prepared statement. 

Broeksmit added that the report “fails to consider the adverse impacts the Basel III Endgame proposal would have on the mortgage market, which, if implemented as proposed, would push banks further out of the business and make it more difficult for them to provide the vital financing that sustains IMBs.” 

The FSOC report includes other recommendations that are focused on improving liquidity during times of stress. One is for Congress to provide Ginnie Mae with authority to expand the Pass-Through Assistance Program (PTAP) that became available during the COVID-19 pandemic. Another is for Congress to consider establishing a fund administered by a newly authorized federal regulator — and financed by servicers — to provide liquidity when they are in bankruptcy or have reached the point of failure. 

Scott Olson, executive director of the Community Home Lenders of America  (CHLA), said that the trade group was “pleased” that the FSOC has embraced its call to expand PTAP, “which would create a liquidity backstop.” 

Brandon Milhorn, president and CEO of the  Conference of State Bank Supervisors  (CSBS), said that the recommendation to establish a fund is “premature at best.”

“Instead, federal agencies, Ginnie Mae, and Congress should focus their immediate efforts on targeted structural changes included in the FSOC report,” Milhorn said. “I encourage Congress to remove any legal impediments to information sharing between Ginnie Mae and state regulators. This common-sense reform should be taken long before Congress considers establishing a federal regulatory agency that unnecessarily duplicates existing state authority.” 

Director Rohit Chopra   said the  Consumer Financial Protection Bureau  (CFPB) will soon propose a rule “to strengthen certain homeowner protections.” Still, it must be “accompanied by strong financial stability guardrails.” 

“We will be undertaking a rulemaking to strengthen our foreclosure protections for borrowers,” Chopra said. “The existing rules leave too many borrowers exposed to foreclosure and junk fees while they struggle to meet seemingly endless paperwork requirements. The proposed rule we are considering would shift the focus from a check-the-box compliance exercise to getting distressed homeowners in loss mitigation quickly.” 

  • Regulatory Compliance

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

Most Popular Articles

Latest articles.

mortgage-e1693983841734

To better support homeownership opportunities, Chase Home Lending has raised its closing guarantee from $5,000 to $20,000 until July 27.

Mortgage advisory firms Stratmor Group, Teraverde merge 

East coast, midwest cities dominate 2024 best places for veterans to live , foa’s resch on the evolution of reverse mortgages for financial planning , jonathan scarpati joins nrmla board of directors , keller williams rescinds changes to its profit-sharing program .

3d rendering of a row of luxury townhouses along a street

Remember me

Don't have an account? Please Sign Up

transfer of mortgage servicing rights

transfer of mortgage servicing rights

U.S. regulators call for new fund to prevent mortgage servicers from going under

U .S. regulators are calling on Congress to introduce a new industry-financed fund to support mortgage-loan servicers as they weather a drought in demand due to high mortgage rates. 

The multiagency​​ Financial Stability Oversight Council, which is chaired by Treasury Secretary Janet Yellen, released a new report on Friday that highlights the risks associated with nonbank mortgage-loan servicers making strong gains in market share. 

The FSOC was created in the wake of the 2008 financial crisis by the Dodd-Frank Act, to identify and monitor risks to the U.S. economy. 

Nonbank mortgage lenders originated around two-thirds of mortgages in the U.S. in 2022, the report stated, and owned the servicing rights on 54% of mortgage balances.

These companies have increased their market share from a low in 2008, when they only originated 39% of mortgages and owned the servicing rights to just 4% of mortgage balances, the report noted.

These outstanding mortgages are guaranteed by government enterprises Fannie Mae and Freddie Mac, as well as government agency Ginnie Mae.

The fact that these mortgage servicers have made strong gains in market share means that there are “unique risks” that they face, as “their specialized business model means they are especially susceptible to macroeconomic fluctuations in the housing market, such as changes in housing prices, interest rates, and delinquency rates,” Yellen said in remarks.

Home prices have hit an all-time high , according to the latest read by the Case-Shiller index. In early May, mortgage applications were down 14% from a year ago as the 30-year mortgage rate stayed above 7%, straining how much home buyers can afford. 

Unlike banks and other financial institutions that can rely on deposits by consumers, nonbank mortgage companies rely on the value of mortgage-servicing rights, “which may lose value in the event of a downturn in the housing market,” Yellen said. And when these mortgage servicers fail, the process of transferring servicing is an arduous process. 

The bottom line is that “vulnerabilities of nonbank mortgage companies can amplify shocks in the mortgage market and undermine financial stability,” Yellen added.

To that end, the FSOC made several recommendations to address such risks, including the creation of a new fund.

The council made a specific recommendation to Congress to consider legislation that would provide Ginnie Mae with the authority to expand the Pass-Through Assistance Program — which, during the coronavirus pandemic, assisted lenders who were facing a temporary liquidity shortfall — to a “more effective liquidity backstop to mortgage servicers participating in the program during periods of severe market stress.”

Additionally, the FSOC encouraged Congress to create a new fund that would be financed by the nonbank mortgage-servicing sector to provide more liquidity to servicers who are in bankruptcy or have reached the point of failure, so that servicing is not disrupted. 

The fund should be designed to help servicers transfer operations if they go under, the council said, and also ensure that loss-mitigation efforts are in place for borrowers who miss payments and that investors still get paid “until servicing obligations can be transferred in an orderly fashion or the company has been recapitalized by investors or sold.” 

The legislation also “should outline the scope and objectives of the fund, which include avoiding taxpayer-funded bailouts,” the report added.

U.S. regulators call for new fund to prevent mortgage servicers from going under

Want To Buy a New Home and Keep Your Current Low Interest Rate? Try ‘Porting’ Your Mortgage

( Getty Images )

Want To Buy a New Home and Keep Your Current Low Interest Rate? Try ‘Porting’ Your Mortgage

High interest rates are one of the most significant hurdles buyers face when jumping into the housing market right now. As anyone who purchased a home in the last few years knows, interest rates have more than doubled since 2020. For a 30-year fixed-rate mortgage , you’re looking at an average interest rate somewhere between the mid-6% and +7%  as of late.

So if you need to move, you might feel financially overwhelmed by the prospect of giving up your low, locked-in interest rate for a new rate that could be twice as high.

Enter “mortgage porting,” the practice of transferring the terms of your existing mortgage over to a new property. But how exactly does it work, and what will you need to qualify? Here’s some expert advice on what you’ll want to know before you consider porting your mortgage.

What is porting a mortgage?

Porting a mortgage essentially means transferring your mortgage to a new house. This will include the current terms of your loan, such as the interest rate and payment schedule.

But you can’t simply take your loan and plop it onto your new home. Instead, porting a mortgage often involves reapplying for your current loan, even though you already qualified once.

The only catch? You have to find out whether you and your mortgage are eligible.

How to determine if your mortgage is eligible

The thought of saving tons of money over the life of a new loan is a game-changer if you’re currently shopping for a home and facing high interest rates. But make sure you can port your mortgage before diving too deeply into your new home search.

“Eligibility for porting a mortgage is varied—you never know what you’re gonna get,” says financial advisor James Allen , of Billpin . “Some lenders allow it, others don’t. And not all mortgages are portable.”

For example, most variable-rate mortgages (a type of loan where the rate is not fixed) can’t be ported at all.

Another thing that will affect your eligibility is the amount of your mortgage as it compares to the home you want to buy.

“You can’t port if you’re moving into a less expensive home and don’t require the entire existing mortgage,” says Dennis Shirshikov , of real estate investment company Awning.com .

However, you might be able to port your mortgage if you’re moving into a home with an asking price equal to or higher than your current home loan.

“If the mortgage you’ll need for the new property is larger, your lender may offer you a ‘blend and extend,’” says Allen. “It’s like mixing the old and new, where you end up with a rate that mixes your old and current rates.”

Are you eligible?

Another thing to consider is whether you, as a borrower, are eligible for porting.

“The standard requirement is an excellent repayment history and meeting your lender’s affordability criteria for the new property,” says Shirshikov.

Your lender will likely want you to complete an entirely new loan application, including  affordability checks and  a credit check for you and your co-applicant.

Some lenders may even impose additional conditions, such as asking you to top-up your mortgage (i.e., borrow against any equity you have in your home) if the new property is more expensive.

When porting is a good idea

Porting your mortgage makes sense if you secured more favorable loan terms in the past and won’t be able to replicate them without porting.

“Porting is most advantageous when your current mortgage rate is significantly lower than market rates,” says Shirshikov. “However, if the current market rates are lower or the same, it might be worth exploring a new mortgage instead.”

How to port your mortgage

The first step in porting your mortgage is talking to your existing mortgage team.

“Speak with your current lender to confirm portability and understand the process,” says Shirshikov. “Remember to consider all costs, including potential penalties or fees associated with porting, to make sure it makes sense financially.”

While lenders usually make eligibility decisions promptly, processing time can still take up to several weeks. So it’s a good idea to start the process early.

“The timeline depends on factors like the real estate market and your personal circumstances, but typically it aligns with the closing date of your new property,” says Shirshikov.

The final word

Before settling on porting your mortgage, be sure to shop around the market and confirm that your current interest rate is still the best one out there.

Depending on the kind of loan you need, the amount, and any other life circumstances that might have changed since you last took out a mortgage—there could be better rates on the market.

The bottom line? Porting a mortgage is about as much work as applying for a new one, so always make sure it’s a deal worth securing.

Larissa Runkle (@therealtorwriter) is a real estate copywriter and journalist living in Colorado.

Ok, so how do I get my dream home?

  • Calculator See how much home I can afford
  • Get pre-approval by a lender
  • View current mortgage rates
  • Related Articles

Share this Article

U.S. Department of the Treasury

The financial stability oversight council releases report on nonbank mortgage servicing.

WASHINGTON — The Financial Stability Oversight Council (Council) today released its Report on Nonbank Mortgage Servicing .  The report documents the growth of the nonbank mortgage servicing sector and the critical roles that nonbank mortgage servicers play in the mortgage market.  It identifies certain key vulnerabilities that can impair servicers’ ability to carry out these critical functions and describes how these vulnerabilities could amplify shocks to the mortgage market and pose risks to financial stability.  The report includes the Council’s recommendations to enhance the resilience of the nonbank mortgage servicing sector, drawing on existing authorities of state and federal regulators and also encouraging Congress to act to address the identified risks.  The report was drafted by Council member agencies in coordination with the Government National Mortgage Association (Ginnie Mae). 

“The nonbank mortgage servicing sector plays an important role in our economy, and the Council has produced a comprehensive analysis of risks in the sector and is making concrete recommendations to protect U.S. financial stability,” Secretary of the Treasury Janet L. Yellen said.  “We need further action to promote safe and sound operations, address liquidity risks, and enable continuity of servicing operations when a servicer fails.  Moving the Council’s recommendations forward is crucial to protecting borrowers and preventing disruptions to economic activity.”

In 2022, nonbank mortgage companies (NMCs) originated approximately two-thirds of mortgages in the United States and owned the servicing rights on 54 percent of mortgage balances.  NMC market share has risen significantly since its low in 2008, when NMCs originated 39 percent of mortgages and owned the servicing rights on only 4 percent of mortgage balances.  Nonbank mortgage servicers are 7 of the 10 largest servicers for Fannie Mae, Freddie Mac, and Ginnie Mae.   

NMCs bring certain strengths to the mortgage market.  However, NMCs also have vulnerabilities, and in a stress scenario, NMCs’ vulnerabilities could cause NMCs to amplify and transmit the effect of a shock to the mortgage market and broader financial system.  

  • NMC strengths : NMCs are significant mortgage originators and servicers for groups that have historically been underserved by the mortgage market. Some NMCs have also developed technology platforms that enable them to originate mortgages more quickly than their competitors, and others have expanded into specialty default servicing for nonperforming loans and loss mitigation.
  • NMC vulnerabilities : NMCs’ concentrated exposure to mortgage-related assets means that stress in the mortgage market can lead to adverse effects on their income, balance sheets, and access to credit simultaneously.  NMCs’ obligations to make certain contractually required advances, as well as their reliance on debt that can be repriced, reduced, or canceled in times of stress, can lead to significant liquidity risk, which is exacerbated by high leverage carried by some NMCs.  Finally, vulnerabilities are similar across NMCs, so certain macroeconomic scenarios may lead to stress across the entire sector.
  • Transmission channels : When these vulnerabilities compromise NMCs’ ability to carry out their critical functions, borrowers may suffer from disruptions in the servicing of their mortgages, and Fannie Mae, Freddie Mac, and Ginnie Mae may experience sizeable losses. Since NMCs have similar business models and share financing sources and subservicing providers, distress in the NMC sector may be widespread during times of strain.  Financial distress at NMCs that is sufficiently severe and widespread could lead to a reduction in servicing capacity and in the availability of mortgage credit.  Large servicing portfolios cannot be transferred quickly because the transfer process is inherently resource-intensive and complicated.  In addition, it might be difficult to identify another servicer to take over the portfolio, in part because the similarity of NMC business models means that other NMCs may be facing the same stresses at the same time.

State regulators and federal agencies have taken steps in recent years to mitigate the risks posed by the rising share of mortgages serviced by NMCs, but the combination of various state requirements and limited federal authorities to impose additional requirements do not adequately and holistically address the risks described in the Council’s report.  Stress in the sector could harm mortgage borrowers and, more broadly, disrupt the provision of financial services and impair the ability of the financial system to support economic activity.  The Council is making several recommendations to address the risks posed by nonbank mortgage servicers identified in the report.  

  • Promoting safe and sound operations : The Council encourages state regulators, as the primary prudential regulators of nonbank mortgage servicers, to enhance prudential requirements as appropriate, adopt enhanced standards in those states that have not yet done so, and further coordinate supervision of nonbank mortgage servicers. State regulators should require recovery and resolution planning by large nonbank mortgage servicers to enhance the financial and operational resilience of the nonbank mortgage sector.  The Council also encourages Congress to provide the Federal Housing Finance Agency (FHFA) and Ginnie Mae with additional authorities to better manage the risks of NMC counterparties to Fannie Mae and Freddie Mac and to Ginnie Mae, respectively.  Congress should consider providing FHFA and Ginnie Mae with additional authority to establish appropriate safety and soundness standards and to directly examine nonbank mortgage servicer counterparties for, and enforce compliance with, such standards.  To facilitate coordination, the Council recommends Congress consider authorizing Ginnie Mae and encouraging state regulators to share information with each other and with Council member agencies, as appropriate.
  • Addressing liquidity pressures in the event of stress : The Council recommends that Congress consider legislation to provide Ginnie Mae with authority to expand the Pass-Through Assistance Program into a more effective liquidity backstop to mortgage servicers participating in the program during periods of severe market stress. In addition, the Council supports the Department of Housing and Urban Development’s ongoing administrative work to relieve liquidity pressures for Ginnie Mae issuers as well as Ginnie Mae’s ongoing efforts to explore ways to facilitate financing for relieving liquidity pressures for solvent issuers.  Federal agencies should further explore and evaluate how existing policy tools and authorities could be further leveraged to reduce liquidity pressures from servicing advance obligations in times of stress.
  • Ensuring continuity of servicing operations: The Council encourages Congress to consider establishing a fund financed by the nonbank mortgage servicing sector to provide liquidity to nonbank mortgage servicers that are in bankruptcy or have reached the point of failure. The fund should be designed to facilitate operational continuity of servicing, including loss-mitigation activities for borrowers and advancement of monthly payments to investors, until servicing obligations can be transferred in an orderly fashion or the company has been recapitalized by investors or sold.  The legislation should outline the scope and objectives of the fund, which include avoiding taxpayer-funded bailouts.  The legislation should also provide sufficient authorities to an existing federal agency to implement and maintain the fund, assess appropriate fees, set criteria for making disbursements, and mitigate risks associated with the implementation of the fund.  The establishment of such a fund should be accompanied by the additional regulatory authorities and consumer protections recommended in the Council’s report.

The Council will continue to monitor the evolution of the risks identified in the report and may take or recommend additional actions to mitigate such risks in accordance with the Analytic Framework for Financial Stability Risk Identification, Assessment, and Response that the Council adopted in November 2023, if needed.

The full report can be viewed here . 

Secretary Yellen’s remarks on the report during the open session of the Council meeting can be viewed here .

TIME Stamped: Personal Finance Made Easy

Personal Finance

Reverse mortgage vs. home equity loan: key differences and which to choose.

Reverse Mortgage vs Home Equity Loan

Our evaluations and opinions are not influenced by our advertising relationships, but we may earn a commission from our partners’ links. This content is created independently from TIME’s editorial staff. Learn more about it.

A reverse mortgage and home equity loan both allow homeowners to turn their home equity into cash, but each has different requirements, advantages, and disadvantages.

We explain how each works and the major differences between the two to help you decide which to use.

What is a reverse mortgage?

A reverse mortgage is a secured loan for homeowners 62 and over with substantial equity in their home. The loan is paid to homeowners in monthly installments, a single lump sum, or as-needed (like a credit line).

Reverse mortgage requirements can be easier to qualify for because there is no credit score or income requirement, though potential lenders will likely check your credit history. Reverse mortgages are also unique in that they don’t need to be paid back until the homeowner dies, moves, or sells the property. However, they are expensive financing tools that decrease the equity in your home as the loan balance grows.

Pros and cons

  • Money can be used for any purpose
  • Most are backed by the Federal Housing Administration (FHA)
  • Interest rates are typically lower than a home equity loan
  • You must be 62 or older to qualify
  • Erodes equity of home over time
  • Can be more expensive than a traditional mortgage

What is a home equity loan?

A home equity loan is borrowed against your home's equity. You receive the funds in a lump sum and repay the loan in regular installments. The requirements for a home equity loan are more stringent than a reverse mortgage because you need to qualify with your credit score, income, debt-to-income ratio, and equity.

Using your home as collateral makes a home equity loan less expensive, but if you fail to make payments, your lender can start foreclosure proceedings against you. Home equity loans are known for being very flexible. You can use them for just about anything. However, like all financial tools, they have some pros and cons.

  • Lower APR than a personal loan
  • Usually a fixed interest rate
  • Funds disbursed in a lump sum upfront
  • Paying back the loan maintains equity in your home
  • Home is used as collateral
  • Need to make monthly payments
  • Higher APR than a reverse mortgage

Key differences between reverse mortgages and home equity loans

Increasing equity.

The way your equity is used to fund your expenses is different with a home equity loan versus a reverse mortgage. With a reverse mortgage, the monthly payments you receive are added to the loan, with interest and fees. When compounded over time, you begin to lose equity in your home.

On the other hand, with a home equity loan, the equity in your home increases as you pay down the loan.

Tax treatment for a reverse mortgage versus a home equity loan is slightly different. You won’t owe taxes on money that you borrow from either, but with a home equity loan, your interest may be tax deductible if you use the funds from the loan to improve your home and take the itemized deduction instead of the standard deduction.

Credit score and income requirements

When you apply for a home equity loan, the lender will consider your income, credit score , credit history, employment status, home value, loan amount, and desired repayment schedule, among other criteria. This is in stark contrast to a reverse mortgage, which has no credit score or income requirements.

Eligibility requirements

The main difference between a reverse mortgage and a home equity loan is the age requirement for a reverse mortgage—as already mentioned, you need to be at least 62. For a home equity loan, age isn’t a factor.

Other requirements for a reverse mortgage include:

  • Home must be your principal residence.
  • Home must be in good condition.
  • Cannot owe any federal debt, such as student loans.
  • Must have money set aside for property taxes, insurance, and property repairs.
  • Must own the home outright or have substantial equity.

Required equity

Regarding equity requirements, you need a substantial amount to qualify for a reverse mortgage. You should be close to 100% equity if you want a reverse mortgage. Conversely, most lenders only require you to maintain 20% home equity after factoring in a home equity loan.

Interest rate

In our research, we found the interest rate on a reverse mortgage to be lower than on a home equity loan. Be sure to do your own research, as rates can change according to market conditions and your individual circumstances.

Disbursement

With a home equity loan , the money is disbursed in a lump sum all upfront. With a reverse mortgage, you may have the option of taking out a lump sum, receiving monthly payments, or having access to a credit line.

Repayment terms

A reverse mortgage doesn’t need to be repaid until the homeowner sells, moves, or dies. At this point, the entire amount is due. It can be repaid by selling the home, refinancing , using savings, or giving the house to the bank.

A home equity loan begins repayments immediately, typically in monthly installments. If you stop making payments your home may fall into foreclosure.

How to choose between a reverse mortgage and home equity loan

If you still can’t decide between a reverse mortgage and a home equity loan, consider the following comparison:

TIME Stamp: Take extra care when considering a reverse mortgage

Reverse mortgages were designed to help keep older Americans in their homes and stay on top of bills. While they can help homeowners with expenses, you must use caution when taking out a reverse mortgage.

Over the long term, a reverse mortgage may not leave you with much equity and your heirs may need to sell the property to pay off the reverse mortgage. But if it’s the only way to stay in your home and help pay for other living expenses, it might be your best option.

A home equity loan, in contrast, is an installment loan that uses the equity in your home as collateral. If you can handle the monthly payment of a home equity loan, you’ll likely have much more equity in your home and more options as you age.

Frequently asked questions (FAQs)

What is the best option for bad credit.

Reverse mortgages do not have a minimum credit score requirement. If you have bad credit and can’t qualify for a home equity loan, you may want to consider a reverse mortgage.

Can you use a reverse mortgage to pay off a home equity loan?

Yes. A reverse mortgage can be used to pay off a home equity loan, provided there is enough equity in the home. The reverse mortgage lender will want to be in the first lien position and may require any other loans to be paid off.

Which is better for a retired borrower, a reverse mortgage or a home equity loan?

Your individual circumstances will determine which product would work best for you. A financial advisor can help you decide between a reverse mortgage and a home equity loan.

The information presented here is created independently from the TIME editorial staff. To learn more, see our About page.

  • Kreyòl Ayisyen

Consumer Financial Protection Bureau

§ 1026.39 Mortgage transfer disclosures.

  • View all versions of this regulation
  • Search this regulation

(a) Scope. The disclosure requirements of this section apply to any covered person except as otherwise provided in this section. For purposes of this section:

See interpretation of 39(a) Scope in Supplement I

(1) A “ covered person” means any person, as defined in §  1026.2(a)(22), that becomes the owner of an existing mortgage loan by acquiring legal title to the debt obligation, whether through a purchase, assignment or other transfer, and who acquires more than one mortgage loan in any twelve-month period. For purposes of this section, a servicer of a mortgage loan shall not be treated as the owner of the obligation if the servicer holds title to the loan, or title is assigned to the servicer, solely for the administrative convenience of the servicer in servicing the obligation.

1. Covered persons. The disclosure requirements of this section apply to any “covered person” that becomes the legal owner of an existing mortgage loan, whether through a purchase, or other transfer or assignment, regardless of whether the person also meets the definition of a “creditor” in Regulation Z. The fact that a person purchases or acquires mortgage loans and provides the disclosures under this section does not by itself make that person a “creditor” as defined in the regulation.

2. Acquisition of legal title. To become a “covered person” subject to this section, a person must become the owner of an existing mortgage loan by acquiring legal title to the debt obligation.

i. Partial interest. A person may become a covered person by acquiring a partial interest in the mortgage loan. If the original creditor transfers a partial interest in the loan to one or more persons, all such transferees are covered persons under this section.

ii. Joint acquisitions. All persons that jointly acquire legal title to the loan are covered persons under this section, and under § 1026.39(b)(5), a single disclosure must be provided on behalf of all such covered persons. Multiple persons are deemed to jointly acquire legal title to the loan if each acquires a partial interest in the loan pursuant to the same agreement or by otherwise acting in concert. See comments 39(b)(5)-1 and 39(d)(1)(ii)-1 regarding the disclosure requirements for multiple persons that jointly acquire a loan.

iii. Affiliates. An acquiring party that is a separate legal entity from the transferor must provide the disclosures required by this section even if the parties are affiliated entities.

3. Exclusions. i. Beneficial interest. Section 1026.39 does not apply to a party that acquires only a beneficial interest or a security interest in the loan, or to a party that assumes the credit risk without acquiring legal title to the loan. For example, an investor that acquires mortgage-backed securities, pass-through certificates, or participation interests and does not acquire legal title in the underlying mortgage loans is not covered by this section.

ii. Loan servicers. Pursuant to TILA Section 131(f)(2), the servicer of a mortgage loan is not the owner of the obligation for purposes of this section if the servicer holds title to the loan as a result of the assignment of the obligation to the servicer solely for the administrative convenience of the servicer in servicing the obligation.

4. Mergers, corporate acquisitions, or reorganizations. Disclosures are required under this section when, as a result of a merger, corporate acquisition, or reorganization, the ownership of a mortgage loan is transferred to a different legal entity.

See interpretation of Paragraph 39(a)(1) in Supplement I

(2) A “ mortgage loan” means:

1. Mortgage transactions covered. Section 1026.39 applies to closed-end or open-end consumer credit transactions secured by the principal dwelling of a consumer.

See interpretation of Paragraph 39(a)(2) in Supplement I

(i) An open-end consumer credit transaction that is secured by the principal dwelling of a consumer; and

(ii) A closed-end consumer credit transaction secured by a dwelling or real property.

(b) Disclosure required. Except as provided in paragraph (c) of this section, each covered person is subject to the requirements of this section and shall mail or deliver the disclosures required by this section to the consumer on or before the 30th calendar day following the date of transfer.

1. Generally. A covered person must mail or deliver the disclosures required by this section on or before the 30th calendar day following the date of transfer, unless an exception in § 1026.39(c) applies. For example, if a covered person acquires a mortgage loan on March 15, the disclosure must be mailed or delivered on or before April 14.

See interpretation of 39(b) Disclosure Required in Supplement I

(1) Form of disclosures. The disclosures required by this section shall be provided clearly and conspicuously in writing, in a form that the consumer may keep. The disclosures required by this section may be provided to the consumer in electronic form, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act) (15 U.S.C. 7001 et seq. ).

1. Combining disclosures. The disclosures under this section can be combined with other materials or disclosures, including the transfer of servicing notices required by the Real Estate Settlement Procedure Act (12 U.S.C. 2601 et seq. ) so long as the combined disclosure satisfies the timing and other requirements of this section.

See interpretation of 39(b)(1) Form of Disclosures in Supplement I

(2) The date of transfer. For purposes of this section, the date of transfer to the covered person may, at the covered person's option, be either the date of acquisition recognized in the books and records of the acquiring party, or the date of transfer recognized in the books and records of the transferring party.

(3) Multiple consumers. If more than one consumer is liable on the obligation, a covered person may mail or deliver the disclosures to any consumer who is primarily liable.

(4) Multiple transfers. If a mortgage loan is acquired by a covered person and subsequently sold, assigned, or otherwise transferred to another covered person, a single disclosure may be provided on behalf of both covered persons if the disclosure satisfies the timing and content requirements applicable to each covered person.

1. Single disclosure for multiple transfers. A mortgage loan might be acquired by a covered person and subsequently transferred to another entity that is also a covered person required to provide the disclosures under this section. In such cases, a single disclosure may be provided on behalf of both covered persons instead of providing two separate disclosures if the disclosure satisfies the timing and content requirements applicable to each covered person. For example, if a covered person acquires a loan on March 15 with the intent to assign the loan to another entity on April 30, the covered person could mail the disclosure on or before April 14 to provide the required information for both entities and indicate when the subsequent transfer is expected to occur.

2. Estimating the date. When a covered person provides the disclosure required by this section that also describes a subsequent transfer, the date of the subsequent transfer may be estimated when the exact date is unknown at the time the disclosure is made. Information is unknown if it is not reasonably available to the covered person at the time the disclosure is made. The “reasonably available” standard requires that the covered person, acting in good faith, exercise due diligence in obtaining information. The covered person normally may rely on the representations of other parties in obtaining information. The covered person might make the disclosure using an estimated date even though the covered person knows that more precise information will be available in the future. For example, a covered person may provide a disclosure on March 31 stating that it acquired the loan on March 15 and that a transfer to another entity is expected to occur “on or around” April 30, even if more precise information will be available by April 14.

3. Duty to comply. Even though one covered person provides the disclosures for another covered person, each has a duty to ensure that disclosures related to its acquisition are accurate and provided in a timely manner unless an exception in § 1026.39(c) applies.

See interpretation of 39(b)(4) Multiple Transfers in Supplement I

(5) Multiple covered persons. If an acquisition involves multiple covered persons who jointly acquire the loan, a single disclosure must be provided on behalf of all covered persons.

1. Single disclosure required. If multiple covered persons jointly acquire the loan, a single disclosure must be provided on behalf of all covered persons instead of providing separate disclosures. See comment 39(a)(1)-2.ii regarding a joint acquisition of legal title, and comment 39(d)(1)(ii)-1 regarding the disclosure requirements for multiple persons that jointly acquire a loan. If multiple covered persons jointly acquire the loan and complete the acquisition on separate dates, a single disclosure must be provided on behalf of all persons on or before the 30th day following the earliest acquisition date. For examples, if covered persons A and B enter into an agreement with the original creditor to jointly acquire the loan, and complete the acquisition on March 15 and March 25, respectively, a single disclosure must be provided on behalf of both persons on or before April 14. If the two acquisition dates are more than 30 days apart, a single disclosure must be provided on behalf of both persons on or before the 30th day following the earlier acquisition date, even though one person has not completed its acquisition. See comment 39(b)(4)-2 regarding use of an estimated date of transfer.

2. Single disclosure not required. If multiple covered persons each acquire a partial interest in the loan pursuant to separate and unrelated agreements and not jointly, each covered person has a duty to ensure that disclosures related to its acquisition are accurate and provided in a timely manner unless an exception in § 1026.39(c) applies. The parties may, but are not required to, provide a single disclosure that satisfies the timing and content requirements applicable to each covered person.

3. Timing requirements. A single disclosure provided on behalf of multiple covered persons must satisfy the timing and content requirements applicable to each covered person unless an exception in § 1026.39(c) applies.

4. Duty to comply. Even though one covered person provides the disclosures for another covered person, each has a duty to ensure that disclosures related to its acquisition are accurate and provided in a timely manner unless an exception in § 1026.39(c) applies. See comments 39(c)(1)-2, 39(c)(3)-1 and 39(c)(3)-2 regarding transfers of a partial interest in the mortgage loan.

See interpretation of 39(b)(5) Multiple Covered Person in Supplement I

(c) Exceptions. Notwithstanding paragraph (b) of this section, a covered person is not subject to the requirements of this section with respect to a particular mortgage loan if:

See interpretation of 39(c) Exceptions in Supplement I

(1) The covered person sells, or otherwise transfers or assigns legal title to the mortgage loan on or before the 30th calendar day following the date that the covered person acquired the mortgage loan which shall be the date of transfer recognized for purposes of paragraph (b)(2) of this section;

1. Transfer of all interest. A covered person is not required to provide the disclosures required by this section if it sells, assigns or otherwise transfers all of its interest in the mortgage loan on or before the 30th calendar day following the date that it acquired the loan. For example, if covered person A acquires the loan on March 15 and subsequently transfers all of its interest in the loan to covered person B on April 1, person A is not required to provide the disclosures required by this section. Person B, however, must provide the disclosures required by this section unless an exception in § 1026.39(c) applies.

2. Transfer of partial interests. A covered person that subsequently transfers a partial interest in the loan is required to provide the disclosures required by this section if the covered person retains a partial interest in the loan on the 30th calendar day after it acquired the loan, unless an exception in § 1026.39(c) applies. For example, if covered person A acquires the loan on March 15 and subsequently transfers fifty percent of its interest in the loan to covered person B on April 1, person A is required to provide the disclosures under this section if it retains a partial interest in the loan on April 14. Person B in this example must also provide the disclosures required under this section unless an exception in § 1026.39(c) applies. Either person A or person B could provide the disclosure on behalf of both of them if the disclosure satisfies the timing and content requirements applicable to each of them. In this example, a single disclosure for both covered persons would have to be provided on or before April 14 to satisfy the timing requirements for person A's acquisition of the loan on March 15. See comment 39(b)(4)-1 regarding a single disclosure for multiple transfers.

See interpretation of Paragraph 39(c)(1) in Supplement I

(2) The mortgage loan is transferred to the covered person in connection with a repurchase agreement that obligates the transferor to repurchase the loan. However, if the transferor does not repurchase the loan, the covered person must provide the disclosures required by this section within 30 days after the date that the transaction is recognized as an acquisition on its books and records; or

1. Repurchase agreements. The original creditor or owner of the mortgage loan might sell, assign or otherwise transfer legal title to the loan to secure temporary business financing under an agreement that obligates the original creditor or owner to repurchase the loan. The covered person that acquires the loan in connection with such a repurchase agreement is not required to provide disclosures under this section. However, if the transferor does not repurchase the mortgage loan, the acquiring party must provide the disclosures required by this section within 30 days after the date that the transaction is recognized as an acquisition on its books and records.

2. Intermediary parties. The exception in § 1026.39(c)(2) applies regardless of whether the repurchase arrangement involves an intermediary party. For example, legal title to the loan may transfer from the original creditor to party A through party B as an intermediary. If the original creditor is obligated to repurchase the loan, neither party A nor party B is required to provide the disclosures under this section. However, if the original creditor does not repurchase the loan, party A must provide the disclosures required by this section within 30 days after the date that the transaction is recognized as an acquisition on its books and records unless another exception in § 1026.39(c) applies.

See interpretation of Paragraph 39(c)(2) in Supplement I

(3) The covered person acquires only a partial interest in the loan and the party authorized to receive the consumer's notice of the right to rescind and resolve issues concerning the consumer's payments on the loan does not change as a result of the transfer of the partial interest.

1. Acquisition of partial interests. This exception applies if the covered person acquires only a partial interest in the loan, and there is no change in the agent or person authorized to receive notice of the right to rescind and resolve issues concerning the consumer's payments. If, as a result of the transfer of a partial interest in the loan, a different agent or party is authorized to receive notice of the right to rescind and resolve issues concerning the consumer's payments, the disclosures under this section must be provided.

2. Examples. i. A covered person is not required to provide the disclosures under this section if it acquires a partial interest in the loan from the original creditor who remains authorized to receive the notice of the right to rescind and resolve issues concerning the consumer's payments after the transfer.

ii. The original creditor transfers fifty percent of its interest in the loan to covered person A. Person A does not provide the disclosures under this section because the exception in § 1026.39(c)(3) applies. The creditor then transfers the remaining fifty percent of its interest in the loan to covered person B and does not retain any interest in the loan. Person B must provide the disclosures under this section.

iii. The original creditor transfers fifty percent of its interest in the loan to covered person A and also authorizes party X as its agent to receive notice of the right to rescind and resolve issues concerning the consumer's payments on the loan. Since there is a change in an agent or party authorized to receive notice of the right to rescind and resolve issues concerning the consumer's payments, person A is required to provide the disclosures under this section. Person A then transfers all of its interest in the loan to covered person B. Person B is not required to provide the disclosures under this section if the original creditor retains a partial interest in the loan and party X retains the same authority.

iv. The original creditor transfers all of its interest in the loan to covered person A. Person A provides the disclosures under this section and notifies the consumer that party X is authorized to receive notice of the right to rescind and resolve issues concerning the consumer's payments on the loan. Person A then transfers fifty percent of its interest in the loan to covered person B. Person B is not required to provide the disclosures under this section if person A retains a partial interest in the loan and party X retains the same authority.

See interpretation of Paragraph 39(c)(3) in Supplement I

(d) Content of required disclosures. The disclosures required by this section shall identify the mortgage loan that was sold, assigned or otherwise transferred, and state the following, except that the information required by paragraph (d)(5) of this section shall be stated only for a mortgage loan that is a closed-end consumer credit transaction secured by a dwelling or real property other than a reverse mortgage transaction subject to §  1026.33 of this part:

1. Identifying the loan. The disclosures required by this section must identify the loan that was acquired or transferred. The covered person has flexibility in determining what information to provide for this purpose and may use any information that would reasonably inform a consumer which loan was acquired or transferred. For example, the covered person may identify the loan by stating:

i. The address of the mortgaged property along with the account number or loan number previously disclosed to the consumer, which may appear in a truncated format;

ii. The account number alone, or other identifying number, if that number has been previously provided to the consumer, such as on a statement that the consumer receives monthly; or

iii. The date on which the credit was extended and the original amount of the loan or credit line.

2. Partial payment policy. The disclosures required by § 1026.39(d)(5) must identify whether the covered person accepts periodic payments from the consumer that are less than the full amount due and whether the covered person applies the payments to a consumer's loan or holds the payments in a separate account until the consumer pays the remainder of the full amount due. The disclosures required by § 1026.39(d)(5) apply only to a mortgage loan that is a closed-end consumer credit transaction secured by a dwelling or real property and that is not a reverse mortgage transaction subject to § 1026.33. In an open-end consumer credit transaction secured by the consumer's principal dwelling, § 1026.39(d) requires a covered person to provide the disclosures required by § 1026.39(d)(1) through (4), but not the partial payment policy disclosure required by § 1026.39(d)(5). If, however, the dwelling in the open-end consumer credit transaction is not the consumer's principal dwelling ( e.g., it is used solely for vacation purposes), none of the disclosures required by § 1026.39(d) is required because the transaction is not a mortgage loan for purposes of § 1026.39. See § 1026.39(a)(2). In contrast, a closed-end consumer credit transaction secured by the consumer's dwelling that is not the consumer's principal dwelling is considered a mortgage loan for purposes of § 1026.39. Assuming that the transaction is not a reverse mortgage transaction subject to § 1026.33, § 1026.39(d) requires a covered person to provide the disclosures under § 1026.39(d)(1) through (5). But if the transaction is a reverse mortgage transaction subject to § 1026.33, § 1026.39(d) requires a covered person to provide only the disclosures under § 1026.39(d)(1) through (4).

See interpretation of 39(d) Content of Required Disclosures in Supplement I

(1) The name, address, and telephone number of the covered person.

1. Identification of covered person. Section 1026.39(d)(1) requires a covered person to provide its name, address, and telephone number. The party identified must be the covered person who owns the mortgage loan, regardless of whether another party services the loan or is the covered person's agent. In addition to providing its name, address and telephone number, the covered person may, at its option, provide an address for receiving electronic mail or an Internet Web site address, but is not required to do so.

See interpretation of Paragraph 39(d)(1) in Supplement I

(i) If a single disclosure is provided on behalf of more than one covered person, the information required by this paragraph shall be provided for each of them unless paragraph (d)(1)(ii) of this section applies.

1. Multiple transfers, single disclosure. If a mortgage loan is acquired by a covered person and subsequently transferred to another covered person, a single disclosure may be provided on behalf of both covered persons instead of providing two separate disclosures as long as the disclosure satisfies the timing and content requirements applicable to each covered person. See comment 39(b)(4)-1 regarding multiple transfers. A single disclosure for multiple transfers must state the name, address, and telephone number of each covered person unless § 1026.39(d)(1)(ii) applies.

See interpretation of Paragraph 39(d)(1)(i) in Supplement I

(ii) If a single disclosure is provided on behalf of more than one covered person and one of them has been authorized in accordance with paragraph (d)(3) of this section to receive the consumer's notice of the right to rescind and resolve issues concerning the consumer's payments on the loan, the information required by paragraph (d)(1) of this section may be provided only for that covered person.

1. Multiple covered persons, single disclosure. If multiple covered persons jointly acquire the loan, a single disclosure must be provided on behalf of all covered persons instead of providing separate disclosures. The single disclosure must provide the name, address, and telephone number of each covered person unless § 1026.39(d)(1)(ii) applies and one of the covered persons has been authorized in accordance with § 1026.39(d)(3) of this section to receive the consumer's notice of the right to rescind and resolve issues concerning the consumer's payments on the loan. In such cases, the information required by § 1026.39(d)(1) may be provided only for that covered person.

2. Multiple covered persons, multiple disclosures. If multiple covered persons each acquire a partial interest in the loan in separate transactions and not jointly, each covered person must comply with the disclosure requirements of this section unless an exception in § 1026.39(c) applies. See comment 39(a)(1)-2.ii regarding a joint acquisition of legal title, and comment 39(b)(5)-2 regarding the disclosure requirements for multiple covered persons.

See interpretation of Paragraph 39(d)(1)(ii) in Supplement I

(2) The date of transfer.

(3) The name, address and telephone number of an agent or party authorized to receive notice of the right to rescind and resolve issues concerning the consumer's payments on the loan. However, no information is required to be provided under this paragraph if the consumer can use the information provided under paragraph (d)(1) of this section for these purposes.

1. Identifying agents. Under § 1026.39(d)(3), the covered person must provide the name, address and telephone number for the agent or other party having authority to receive the notice of the right to rescind and resolve issues concerning the consumer's payments on the loan. If multiple persons are identified under this paragraph, the disclosure shall provide the name, address and telephone number for each and indicate the extent to which the authority of each person differs. Section 1026.39(d)(3) does not require that a covered person designate an agent or other party, but if the consumer cannot contact the covered person for these purposes, the disclosure must provide the name, address and telephone number for an agent or other party that can address these matters. If an agent or other party is authorized to receive the notice of the right to rescind and resolve issues concerning the consumer's payments on the loan, the disclosure can state that the consumer may contact that agent regarding any questions concerning the consumer's account without specifically mentioning rescission or payment issues. However, if multiple agents are listed on the disclosure, the disclosure shall state the extent to which the authority of each agent differs by indicating if only one of the agents is authorized to receive notice of the right to rescind, or only one of the agents is authorized to resolve issues concerning payments.

2. Other contact information. The covered person may also provide an agent's electronic mail address or Internet Web site address, but is not required to do so.

See interpretation of Paragraph 39(d)(3) in Supplement I

(4) Where transfer of ownership of the debt to the covered person is or may be recorded in public records, or, alternatively, that the transfer of ownership has not been recorded in public records at the time the disclosure is provided.

1. Where recorded. Section 1026.39(d)(4) requires the covered person to disclose where transfer of ownership of the debt to the covered person is recorded if it has been recorded in public records. Alternatively, the disclosure can state that the transfer of ownership of the debt has not been recorded in public records at the time the disclosure is provided, if that is the case, or the disclosure can state where the transfer may later be recorded. An exact address is not required and it would be sufficient, for example, to state that the transfer of ownership is recorded in the office of public land records or the recorder of deeds office for the county or local jurisdiction where the property is located.

See interpretation of Paragraph 39(d)(4) in Supplement I

(5) Partial payment policy. Under the subheading “Partial Payment”:

1. Format of disclosure. Section 1026.39(d)(5) requires disclosure of the partial payment policy of covered persons for closed-end consumer credit transactions secured by a dwelling or real property, other than a reverse mortgage transaction subject to § 1026.33. A covered person may utilize the format of the disclosure illustrated by form H-25 of appendix H to this part for the information required to be disclosed by § 1026.38(l)(5). For example, the statement required § 1026.39(d)(5)(iii) that a new covered person may have a different partial payment policy may be disclosed using the language illustrated by form H-25, which states “If this loan is sold, your new lender may have a different policy.” The text illustrated by form H-25 may be modified to suit the format of the covered person's disclosure under § 1026.39. For example, the format illustrated by form H-25 begins with the text, “Your lender may” or “Your lender does not,” which may not be suitable to the format of the covered person's other disclosures under § 1026.39. This text may be modified to suit the format of the covered person's integrated disclosure, using a phrase such as “We will” or “We are your new lender and have a different Partial Payment Policy than your previous lender. Under our policy we will.” Any modifications must be appropriate and not affect the substance, clarity, or meaningful sequence of the disclosure.

See interpretation of 39(d)(5) Partial payment policy. in Supplement I

(i) If periodic payments that are less than the full amount due are accepted, a statement that the covered person, using the term “lender,” may accept partial payments and apply such payments to the consumer's loan;

(ii) If periodic payments that are less than the full amount due are accepted but not applied to a consumer's loan until the consumer pays the remainder of the full amount due, a statement that the covered person, using the term “lender,” may hold partial payments in a separate account until the consumer pays the remainder of the payment and then apply the full periodic payment to the consumer's loan;

(iii) If periodic payments that are less than the full amount due are not accepted, a statement that the covered person, using the term “lender,” does not accept any partial payments; and

(iv) A statement that, if the loan is sold, the new covered person, using the term “lender,” may have a different policy.

(e) Optional disclosures. In addition to the information required to be disclosed under paragraph (d) of this section, a covered person may, at its option, provide any other information regarding the transaction.

1. Generally. Section 1026.39(e) provides that covered persons may, at their option, include additional information about the mortgage transaction that they consider relevant or helpful to consumers. For example, the covered person may choose to inform consumers that the location where they should send mortgage payments has not changed. See comment 39(b)(1)-1 regarding combined disclosures.

See interpretation of 39(e) Optional Disclosures in Supplement I

(f) Successor in interest. If, upon confirmation, a servicer provides a confirmed successor in interest who is not liable on the mortgage loan obligation with a written notice and acknowledgment form in accordance with Regulation X, §  1024.32(c)(1) of this chapter, the servicer is not required to provide to the confirmed successor in interest any written disclosure required by paragraph (b) of this section unless and until the confirmed successor in interest either assumes the mortgage loan obligation under State law or has provided the servicer an executed acknowledgment in accordance with Regulation X, §  1024.32(c)(1)(iv) of this chapter, that the confirmed successor in interest has not revoked.

IMAGES

  1. Fillable Online Successful Strategies to Manage Mortgage Servicing

    transfer of mortgage servicing rights

  2. Mortgage Servicing: Transfer Of Mortgage Servicing Rights

    transfer of mortgage servicing rights

  3. Notice Of Assignment, Sale, Or Transfer Of Servicing Rights, Mortgage

    transfer of mortgage servicing rights

  4. Mortgage Servicing Rights (MSR)

    transfer of mortgage servicing rights

  5. Mortgage Servicing Transfer Disclosure (FREE PRINTABLE)

    transfer of mortgage servicing rights

  6. What are Mortgage Servicing Rights?

    transfer of mortgage servicing rights

VIDEO

  1. Rights and Duties of Mortgagor

  2. Transfer for Benefit of Unborn Person Section 13 of Transfer of Property Act, 1882

  3. Doctrine of Subrogation

  4. New Mortgage Servicer for CCM

  5. LAW OF EQUITY: MORTGAGOR`S EQUITY OF REDEMPTION

  6. Section 58 & 59, Transfer of Property Act

COMMENTS

  1. Mortgage Servicing Transfers

    The only thing that changes with the transfer of servicing rights for your mortgage is who you make your payment to. You'll receive communication from your current servicer with additional information, including contact information for your new servicer. ... Mortgage servicing rights (MSR) are often transferred to a third-party that takes ...

  2. § 1024.33 Mortgage servicing transfers.

    1. The prohibition in § 1024.33 (c) (1) on treating a payment as late for any purpose would prohibit a late fee from being imposed on the borrower with respect to any payment on the mortgage loan. See RESPA section 6 (d) (12 U.S.C. 2605 (d)). 2. A transferee servicer's compliance with § 1024.39 during the 60-day period beginning on the ...

  3. What happens if the company that I send my mortgage payments to changes

    If your mortgage servicing rights are transferred to a new servicer, you will need to start sending your monthly payments to the new servicer after a certain date. You will also need to direct any questions about your loan to the new servicer. ... Your old and new servicers generally must send you a notice telling you about the transfer of the ...

  4. Consumer Financial Protection Bureau Warns Mortgage Servicers About

    Servicing transfers can be positive for consumers, especially when investors require nonperforming servicers to transfer rights to specialty companies that offer better service. But mortgage servicing transfers can also mean consumers must deal with new companies to pay their bills - often with different-looking paperwork, different staff ...

  5. PDF Know your rights Your mortgage servicer must comply with federal rules

    Your servicer is not allowed to charge a fee or require a payment for responding to you. When you write to your mortgage servicer to ask for information or to tell them about an error, the servicer generally has five days (excluding weekends and holidays) to acknowledge your letter. The servicer has extra time to respond to errors or requests ...

  6. What Happens If My Mortgage Servicer Changes?

    After a servicing transfer, you get a limited amount of time during which you may send your mortgage payments to the old servicer rather than the new servicer, even though the new servicer is the proper recipient. The old servicer then has to forward the payment to the new servicer or send it back to you. Mortgage Servicing Transfers

  7. Mortgage Servicing Rights (MSR): Meaning, Example, and History

    Mortgage Servicing Rights - MSR: Mortgage servicing rights (MSR) refer to a contractual agreement where the right, or rights, to service an existing mortgage are sold by the original lender to ...

  8. Top Questions Lenders Are Asking About Servicing Rights and Execution

    The servicing fee is intended to provide the servicer with compensation for its services. The Mortgage Selling and Servicing Contract (MSSC) and the Selling and Servicing Guides provide that Fannie Mae retains the right to terminate the servicer or require the transfer of the servicing rights, either for cause or without cause. If a servicer is ...

  9. Mortgage Loan Sales and Mortgage Servicer Transfers

    Notice of Servicing Transfer. If your mortgage debt is sold and you get an ownership transfer notice, this doesn't necessarily mean that the servicing rights to the mortgage were also sold or that you'll get a new servicer. But if your mortgage loan is transferred to a new servicer, your current servicer and the new servicer must provide you ...

  10. PDF Billing Code: 4810-am-p Bureau of Consumer Financial Protection

    • For each transfer of mortgage servicing that occurs, developing a servicing transfer plan that includes a communications plan, testing plan (for system conversion), a timeline with key milestones and an escalation plan for potential problems. • Conducting meetings to discuss and clarify issues with counterparties in a timely manner;

  11. How and when will my mortgage lender notify me if it transfers ...

    a notice from your current mortgage servicer at least 15 days before the effective transfer date, and. a notice from the new servicer not more than 15 days after the effective date of the transfer. The current servicer and the new servicer may send a single notice, in which case it must be provided to you at least 15 days before the servicing ...

  12. Mortgage Servicing Transfers

    Purpose. The Federal Housing Finance Agency (FHFA) is issuing this advisory bulletin to communicate supervisory expectations for risk management practices in conjunction with the sale and transfer of mortgage servicing rights (MSRs) or the transfer of the operational responsibilities of servicing mortgage loans owned or guaranteed by Fannie Mae and Freddie Mac (collectively, the Enterprises).

  13. Explaining the Loan Process: Service Transfer

    When the servicing of your loan is being transferred, you should receive two notices in the mail: A letter from your current servicer, which should be provided at least 15 days before the effective date of the transfer, commonly referred to as a "goodbye" letter. A letter from your new servicer, which should be provided within 15 days of ...

  14. Mortgage Servicing Rights (MSR)

    The mortgage lender proceeds to transfer its mortgage servicing rights to a third-party company, Company Z. Through the arrangement, Company Z will collect the mortgage payments on behalf of Bank A from the individual. Bank A will compensate Company Z for their services with a flat fee.

  15. PDF Subsequent Transfer of a Mortgage Servicing Portfolio

    When your organization acquires servicing portfolio by way of purchase or by merger, you must complete the appropriate transfer requests to ensure a successful transfer of servicing and have access to the applications required to perform the following servicing-related activities: Investor reporting and ACH Drafting.

  16. What Are Mortgage Servicing Rights?

    The term "mortgage servicing rights" describes the legal right of a company to service a mortgage monthly and enjoy the financial benefits of doing so. Several different responsibilities come with servicing a mortgage. In many cases, when mortgage servicing rights are transferred from one party to another, they will transfer all rights.

  17. Transfer of Mortgage: What it Is and How it Works

    Transfer of Mortgage: A transaction where either the borrower or lender assigns an existing mortgage (bank loan to purchase a residential property) from the current holder to another person or ...

  18. Mortgage Servicing Rights (MSR)

    The mortgage servicing rights (MSR) market has seen many changes. This section will highlight some of these developments and their implications. ... Federal banking laws today allow lenders to sell mortgage servicing rights or transfer them to another party without the borrower's consent. However, in case of a transfer or sale, the borrower ...

  19. Handling of Information and Documents During Mortgage Servicing

    The Bureau is issuing this Bulletin to residential mortgage servicers and subservicers in light of potential risks to consumers that may arise in connection with transfers of residential mortgage servicing rights. This bulletin covers (A) transfer-related policies, and (B) procedures and loan information and documents for ensuring accuracy.

  20. 6.3 Recognition and measurement of servicing rights

    ASC 860 requires that separately recognized servicing rights be measured initially at fair value. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Measurements of the fair value of servicing rights may consider the present value of expected cash flows ...

  21. Federal Register :: Mortgage Servicing Rights

    A Federal credit union may purchase mortgage servicing rights from other federally insured credit unions as an investment if all of the following conditions are met: (1) The underlying mortgage loans of the mortgage servicing rights are loans the Federal credit union is empowered to grant; (2) the Federal credit union purchases the mortgage ...

  22. Here's a balanced approach to non-bank mortgage servicing

    The report's executive summary makes numerous points: independent mortgage banks play a"key role" in originating and servicing loans for underserved borrowers; IMBs now originate and service a majority of mortgage loans; Ginnie Mae and GSE securitizations make up an increasing share of the mortgage market; and IMBs rely on financing that can be repriced or canceled in times of financial stress.

  23. FSOC recommends more regulation and liquidity for nonbank servicers

    Meanwhile, they owned servicing rights on 54% of mortgage balances in 2022, up from 4% in 2008. In addition, nonbanks represent seven of the 10 largest servicers of Fannie Mae , Freddie Mac and ...

  24. U.S. regulators call for new fund to prevent mortgage servicers ...

    Nonbank mortgage lenders originated around two-thirds of mortgages in the U.S. in 2022, the report stated, and owned the servicing rights on 54% of mortgage balances.

  25. Want To Buy a New Home and Keep Your Current Low Interest Rate? Try

    For a 30-year fixed-rate mortgage, you're looking at an average interest rate somewhere between the mid-6% and +7% as of late. So if you need to move, you might feel financially overwhelmed by ...

  26. The Financial Stability Oversight Council Releases Report on Nonbank

    In 2022, nonbank mortgage companies (NMCs) originated approximately two-thirds of mortgages in the United States and owned the servicing rights on 54 percent of mortgage balances. NMC market share has risen significantly since its low in 2008, when NMCs originated 39 percent of mortgages and owned the servicing rights on only 4 percent of ...

  27. Reverse Mortgage vs. Home Equity Loan: Which to Choose?

    The way your equity is used to fund your expenses is different with a home equity loan versus a reverse mortgage. With a reverse mortgage, the monthly payments you receive are added to the loan ...

  28. § 1026.39 Mortgage transfer disclosures.

    1. Identification of covered person. Section 1026.39 (d) (1) requires a covered person to provide its name, address, and telephone number. The party identified must be the covered person who owns the mortgage loan, regardless of whether another party services the loan or is the covered person's agent.

  29. How to Get a Lower Interest Rate on a Mortgage

    Here's a look at two potential scenarios for someone who takes out a $500,000, 30-year loan at a 7% interest rate now and then refinances into a new 30-year loan with a lower rate later on ...