What happens when your mortgage is sold to a new lender? Can the new lender increase your monthly payment or change your loan terms?
In short, when you mortgage is sold from one lender to another it does not change the terms of your loan or your monthly payment. You may make your payment to a new mortgage servicer -- the company that collects your payment and manages your loan -- but your mortgage terms including your payment, interest rate, loan features and length remain unchanged. Additionally, the new lender or servicer is your point of contact if you have any questions about your loan.
Your new lender cannot charge you a higher mortgage rate, increase your monthly payment or impose fees and penalties unless permitted by your original mortgage note, which is the document you signed when you obtained your loan. Your mortgage may be sold or transferred multiple times over the course of your loan but the terms outlined in your mortgage note remain intact unless both you and the lender agree to modify them. A lender cannot unilaterally change the terms of a mortgage without the written consent of the borrower.
Please note that any outstanding late fees, penalties or past-due payments on your account are transferred to the new lender when your mortgage is sold but your new lender cannot impose any additional charges or fees unless they are stipulated in your mortgage note.
Your current or new lender may also increase your monthly payment -- at least temporarily -- to address any shortage in your impound or escrow account, but again, the mechanism for solving an impound account deficiency should be outlined in your mortgage note. Additionally, your monthly loan statement or other correspondence from the lender (or even a brief phone conversation) should enable you to understand if your payment increased due to an impound account related issue.
If you notice any unexplained differences in your monthly payment or statement after your loan is sold to a new lender then I recommend that you review your mortgage note to understand why the changes occurred. If you cannot determine the cause of the changes and you think the lender is not abiding by the terms of your original mortgage note then contact the lender and ask for an explanation.
If you cannot resolve the situation by speaking with your new lender then you should contact your state attorney general or the Consumer Financial Protection Bureau (CFPB) to look into the matter more closely. These entities can review your situation, help you understand your rights and look into potential instances of lender fraud. I have included information for the CFPB below.
CFPB Contact Information Website
Sources
“What happens if my mortgage is sold? Is my loan safe?” CFPB. Consumer Financial Protection Bureau, August 5 2016. Web.
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