This Week's Q & A

Q: I am shopping for a mortgage and want to be certain that I don't end up dealing with some entity located hundreds of miles away. Is there any way I can make sure the lender from which I obtain my mortgage won't sell it?

A: Your question is not really whether a lender will sell your mortgage (the vast majority of loans are sold today) but whether the lender plans to sell the servicing rights along with the loan. On that score, there are no guarantees; a lender that has no immediate plans to sell loan servicing today may find compelling business reasons for doing so in the future. However, there is some information mortgage lenders are now required to provide which can give you an indication of the likelihood that the servicing on your loan will be sold. Specifically, lenders making "federally related mortgage loans" (that's virtually any lender selling loans in the secondary market) are required to disclose to borrowers:

	Whether the servicing might be sold or assigned at any time during the term of the loan. A lender that only originates loans but does not service them would have to disclose that fact.
	The percentage of loans on which the lender has transferred servicing during the past three years; and
	The best estimate of the percentage of loans the lender is likely to transfer over the next 12 months.

Again, you can't view a low transfer rate as an ironclad guarantee that your loan will be serviced locally now and for all time, but you can certainly make some reasonable assumptions about the relative transfer risks at various lenders based on the disclosures they are required to provide.

If the servicing on a loan you currently have is transferred, your current servicer must notify you of the impending transfer at least 15 days before it occurs, specifying, among other details:

	The effective date of the transfer (when the first payment to the new servicer will be due);
	The name and address of the new servicer; and
	Toll-free or collect call telephone number at which both the current servicer and the new servicer can be contacted.

The service transfer rules, which were adopted more than a decade ago, also provide some protection for borrowers who mistakenly send their payments to the old address after servicing has been transferred. The rules prohibit servicers from imposing a late payment fee on borrowers for a period of 60 days beginning with the effective date of the transfer, as long as the old servicer receives the borrower’s payment before the loan due date.