Can You Change Your Mortgage Loan Servicer?

Can you change your mortgage loan servicer? The short answer is no, but a few calls can help you smooth out the problems you’re facing.

Q: Is it possible to change my loan servicer? My refinance was done by a national mortgage lender. They immediately transferred it to a well-known loan servicer. However, my monthly payments from my bank were returned.

I had three conversations with the servicer’s customer service representatives and we tried to figure out why the payments were returned. The letter I received from the loan servicer from my closing gave me an address where I should send my payments but I was told there was a closer address that I should use.

My first payment to them was returned and after discussing this with them I asked if I could resend it and it was posted. All subsequent payments were sent back which I then paid on the phone (to stay current) and was advised that it would take 20 days to investigate the problem.

The last two calls postulated a variety of suggestions about how this went wrong, including how the bank might have made an error (which I think is what happened) or the suggestion that I might have incorrectly used a bad loan number, or had the wrong PO Box number on the payments.

Other than the suggestion that they made a mistake, none of this makes any sense. I’d appreciate hearing about your experiences and any of your insights as to whether I can change servicers, or how I can rectify this experience.

No, You Can’t Change Your Mortgage Loan Servicer

A: No, you can’t choose your loan servicer. The loan servicer is chosen by the lender that holds your loan and despite the ordeal ahead, you must deal with them and their forms to get your loan paid on time.

At one time, Sam was a firm believer in making payments through his bank to the mortgage company. But in the last year, he’s decided to set up direct payment through the party receiving the payment. That’s because stories like yours are rampant.

How to Deal With Mortgage Loan Servicer Issues

Your best bet is to call the loan servicer and have them auto-debit your account directly. What will happen is the servicer will pull the funds from your account automatically and you won’t have to worry about any post office delivery issues, wrong address issues, or other processing issues on the servicer’s end.

Bank checks have a way of drifting off course. Sam recently sent out a payment from his online bank account for a sizeable sum only to have that bill-pay check diverted (i.e. stolen), altered and cashed by the thief. It took four months to get that money back into his account and in the meantime, he had to pay that creditor separately for the amount owed. Now he pays them via auto debit.

If your bank has a way to electronically transfer funds to your loan servicer, you should check that out first. Otherwise, you need to make sure that the information on the check going to the loan servicer has all the information they need to credit your account correctly.

For starters, when you fill out a paper check, send that check to the loan servicer in the envelope they provide along with a copy of your statement. At a minimum, the information you need to have on the check sent out from your bank is the loan number, address for your home and the name of the borrower on the loan.

Without all that information, the loan servicer may not be able to correctly process the payment. Remember that some of these lenders loan numbers start with a bunch of zeros at the beginning. If you are missing a zero or fail to place the zeros, the machine readers at these loan servicers may bounce the check if they don’t recognize the sender.

If you’re extremely careful, you can try again to make your mortgage payment through your bank. Make sure you use the address listed in the payment coupon or monthly statement. Make sure the loan number is printed on the check along with your name and address for the property. Usually you can add information to the bank autopay system that allows you to put that information in the memo line.

But it’s often safer to just call the loan servicer and set up auto-debit with them so that they pull the funds from your bank account on a certain date before the payment is delinquent. Just be sure you’ll have enough funds in the account to cover the auto debit so that you don’t wind up with an overdraft fee.

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