What to do if Your Loan Servicer Changes

It is not uncommon for our broker’s clients to receive a notice that their loan “servicing” is being transferred to another company. Servicing is the collection of the monthly mortgage payments. If your client’s loan payment is set-up with an escrow (aka impound) account for taxes and insurance, their servicer will disburse those payments as well. These transfers are often smooth but there are steps you can advise your client to take to help ease the transition. And the last thing Orion wants is to have any money misplaced “in the system.”

If your client is setup on autopay for their mortgage payment, whether or not they’re with Orion or not, brokers usually advise borrowers to make sure they cancel the payment to their “soon to be” old servicer. And it is important to save their recent statement as it will provide verification of outstanding mortgage balance and the balance in the impound account for taxes and insurance. Also, the statement will show the total interest paid to that servicer for their records for filing tax returns they can match to the IRS form 1098 (mortgage interest paid).

Brokers will advise clients that after they have made their initial payment to the new servicer, verify the payment has cleared their bank account and then contact the new servicer to confirm payment has been applied to the account. If your client has an impound account, ask what the balance is in the impound account before and after the payment to verify the payment has been applied properly. Borrowers should not set up auto-pay until they have made one, and preferably two, payments to their new servicer and received statements confirming the payments have been properly applied.

Orion’s brokers remind borrowers that anyone who has an impound account for taxes and insurance, be sure to follow up when these balances are due to verify each was paid on time and in full. Property tax information is available on the website for the county in which the property is located. Your client should contact their insurance company to confirm that they have a new servicer and ask to be notified when the payment has been made. And if you any questions whatsoever about servicing transfers, contact your Orion AE!

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