FOR YOUR INFORMATION...............................JUNE 12, 1992
Can your home mortgage be sold to another mortgage servicer?
How will you know where to send your payments? Can the new
servicer change the loan terms? To help answer these and other
questions, the Federal Trade Commission has issued a new consumer
fact sheet, titled "Mortgage Servicing," that explains what a
mortgage servicer does, as well as consumers' rights under the
1990 National Affordable Housing Act. Home mortgage servicers
collect monthly mortgage payments, manage escrow accounts, and
pay personal property taxes and homeowners insurance. Some
consumers have complained that they were not given enough notice
of loan servicing transfers and were charged late fees and
penalties.
Under the Housing Act, lenders must inform consumers whether
they intend to sell the mortgage servicing, and to notify
consumers at least 15 days before the effective date of the
transfer of the loan servicing. And the new servicer has to
write consumers within 15 days of the transfer to disclose
certain information, such as when it should begin receiving
monthly payments and who consumers can call if they have any
questions or problems.
The act also says that during a 60-day grace period after
the transfer, consumers cannot be charged a late fee for
mistakenly sending their payments to the old servicer instead of
the new one. Further, the act requires the new servicer to send
consumers a statement that the transfer will not affect any terms
or conditions of the mortgage, except those directly related to
the servicing of the loan. The new FTC fact sheet also tells
consumers where to write if they have a complaint or inquiry.
- more -
(Mortgage Servicing--06/09/92)
For a free copy of "Mortgage Servicing," consumers may write
the FTC's Public Reference Branch, 6th Street and Pennsylvania
Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY 202-326-
2502.
# # #
MEDIA CONTACT: John Leslie III, Office of Public Affairs
202-326-2180
STAFF CONTACT: Joanne B. Carter, Office of Consumer and Business
Education, 202-326-2446
(Mortserv)