The volatile state of the mortgage market has led to many unexpected problems for homeowners. One problem that often arises is confusion when a homeowner's mortgage is sold. Although transfers are common, there are scams related to mortgage transfers that can catch even the most astute home owner off guard. So, what do you need to know if your home mortgage is transferred? Fortunately, the homeowner has many rights spelled out by the federal government that will protect them from problems when a mortgage changes hands. Knowing these rights will help put your mind at ease when you learn that the company that services your mortgage is selling it.

It’s not personal

Your loan is one part of a huge block of loans your institution is selling. They do this to make money, not because there is anything wrong with your loan or your credit worthiness. In fact, some mortgage lenders sell 80 to 90% of the loans they originate; this is so they have enough capital to continue to make new loans in the community. You may even receive a disclosure of this intent at the loan’s closing, although many people miss this when reading all the fine print.

Make sure that the mortgage was actually transferred

A scam that has been increasing in popularity occurs when a company sends a letter to a home owner, stating that they have acquired the homeowner's mortgage. In fact, this never actually occurred. The unsuspecting homeowner dutifully makes his mortgage payment to the new company, never realizing that something is wrong until he receives a delinquent payment notice from the original lender. By then, there is little hope of recovering the missing money. The best defense against this scam is a good offense. If your lending company sells your mortgage, they are required to send you a written notification of the fact. The company that acquires your mortgage is also required to send you written notification. They must also provide you with the name of someone you can speak with over the telephone or in person to answer any questions that you may have. Without a letter from your current lender and the new lender, continue to send your mortgage payments to the original lender.

Know your rights

There is a law in place that gives you a grace period during the transition when your loan changes hands. This means that if you mail your payment to your original lender, when you should have made the payment to the new lender, or you misunderstood the effective date of the transfer and mailed your check to the new lender, not your original lender, you will not be penalized. There is a 60 day grace period on payments during the transfer time. Payments that are late during this time are not assessed a late fee and will not be reported on your credit record.

Your loan terms cannot change

Regardless of what has happened between the time that you originally qualified for your loan and the time that it is sold, the terms of your loan cannot change. The interest rate must remain the same, and other terms and conditions remain in place. The new lending institution has no legal authority to change any of the terms that were part of your original agreement. Also, the deed of trust cannot be changed. Like the original terms of the mortgage, the deed of trust cannot be changed.

Know that there is a complaint resolution process

If you are experiencing problems during the transition period or after the transfer is complete, the mortgage company is required to have in place a complaint resolution process for the customer to use. Explain your problem in writing, and send the written explanation to the company. It is important not to include this complaint with your payment, but as a separate piece of correspondence. Most mortgage servicers provide a "correspondence" or "inquiries" address somewhere in your coupon book or on your monthly statements. If you are not sure where to mail it, try calling for the correct address to avoid any unnecessary delay in getting your dispute resolved.

Overall, there is no reason to fear a change in your mortgage servicing company. Transfers are part of everyday business for the mortgage company, and it is how they make some of their money. While there may be some confusion during the transition period, by understanding your rights, you can help to ease any difficulties. Once the transition period is complete, you probably will not notice any difference in your service other than the name you write on the checks. If you have any questions during the transfer period, speak with the lender that originally held your mortgage or the new company until you receive the answers you are looking for.