What mortgage documents to expect after closing
14 Common Servicing Documents
You’ve closed on your loan. Congratulations! Now you might be thinking, “What can I expect next?”
The transition from your mortgage lender to your mortgage servicer has begun. (Your mortgage servicer is the organization that you will be sending your monthly payments to who acts on behalf of the owner of the loan.)
As a part of this stage of your mortgage, you will start receiving new documents and communications from them. These documents might appear daunting if you don’t know what to expect, so we’re here to help. Do you have a specific question about mortgage servicing?
Our experts can help. Contact us today to get answers to your questions.
We’ve broken down the 14 common documents you can expect from your servicer as you pay off your mortgage:
- Notice of Servicing Transfer (also called Hello and Goodbye Letters)
- Welcome Package
- Billing Statement
- Escrow Statement
- Mortgage Interest Statement
- Interest Rate Adjustment Notice
- Payoff Statement
- Change of Ownership Notice
- Lender-Placed Insurance
- Preforeclosure Notice / Notice of Default
- Loss Mitigation
- Notice of Error / Request for Information
- Early Intervention Notice with Delinquent Borrowers
- Continuity of Contact with Delinquent Borrowers
Notice of Servicing Transfer (also called Hello and Goodbye Letters)
No later than 15 days before the effective date of the transfer
You received information when your loan closed about where to make your first payments. In the weeks after you close on your mortgage, you may receive a Notice of Servicing Transfer from your lender or servicer. Mortgages change servicers often, so don’t be surprised if you receive this notice from your servicer. This notice will list the new servicer as well as the date that your new servicer will start servicing your loan.
They will also provide contact information for this new servicer, so you can set up an account with them. If this happens, you may get one letter from your current servicer (called a “goodbye” letter) and one from your new servicer (the “hello” letter), or you may get a joint letter with all the necessary information. If your lender is also your servicer, they will provide you with how to set up your payments.
Shortly after your loan starts being serviced
When your Servicer first starts servicing your loan, they will usually send you a “Welcome Package.” This may or may not include the information included in the Notice of Servicing Transfer, but it will include information about how and where to make payments, how to contact the servicer, the servicer’s website information to set up your online account (if applicable), a list of fees for various events or services, and other useful information.
In most cases, even when your lender is also your servicer, the online portal for servicing will be different than what you used while working with your lender to get your loan, so you will need to set up online access for the servicer separately.
In most cases, your mortgage servicer is legally required to provide you with a mortgage statement for each billing cycle of your loan. This statement lists an overview of all the details of your mortgage. This will breakdown each month’s payment and fees along with your past payments and your current balance owed.
If you have an adjustable-rate mortgage, it will list any interest rate changes as well. It will also provide you with information about how to make payments, how to contact your servicer, and how to file a complaint or request for information.
Once per year
Most mortgage loans have an escrow account associated with them. Every time you make a payment on your mortgage, some of your payment is deposited into your escrow account, which is managed by the servicer. The escrow account holds funds to make payments for related expenses, such as property taxes and homeowner or mortgage insurance premiums. This annual statement lists these transactions and any activity over the prior year and estimates any changes to your escrow account (and thus your payment amount) over the coming year.
Mortgage Interest Statement
Once per year
Your mortgage interest statement is an important annual tax document (IRS tax form 1098) that provides you with important information about the types of payments you’ve made that are associated with your mortgage. This document shows you how much mortgage interest, mortgage insurance premiums and points that you’ve paid during the prior year. Your servicer will send you this document to keep in your records and provide for the upcoming tax season. You can find a sample form provided (in English) by the IRS here.
Proper Rate does not provide tax advice. The consumer should always consult a tax advisor for information regarding the deductibility of interest and other charges in their particular situation.
Interest Rate Adjustment Notice
- First Adjustment (210-240 days before first adjusted payment is due)
- Next Adjustments (60-120 days before first adjusted payment is due)
If you have an adjustable-rate mortgage (ARM), you will receive a notice that informs you of any changes to your interest rate as well as the date that this new rate takes effect. The notice will also show you how the interest rate change will affect your payment.
If you’re able to pay your remaining balance in a single payment or thinking about refinancing your mortgage, you can request a payoff statement from your servicer that will give you the specific amount needed to pay off your mortgage in full. This amount will include the amount of principal, interest, and any additional fees owed on your mortgage. Remember, the interest on your loan balance is added daily. Servicers must send you this document within 7 business days of your request.
Change of Ownership Notice
No later than 30 days after the date of the transfer of ownership
Sometimes, though not often, your loan will be sold to another owner, like Fannie Mae, Freddie Mac, another bank or a different financial institution. When this happens, you will receive a notice of this change. The owner of your loan is not always the servicer of your loan, but understanding who owns your loan can also help you understand some of the requirements the servicer must follow.
Borrower meets qualifications
If your homeowner’s insurance policy has lapsed or your mortgage servicer does not have information about your homeowner’s insurance policy, your servicer may have to purchase insurance to protect the home. This is known as “Lender-Placed Insurance”, and you will still be responsible for paying for it. You will receive two different notices from your servicer to supply information about your homeowner’s insurance before your servicer acquires the Lender-Placed Insurance.
If it is purchased, you will receive paperwork notifying you of this along with your new charges to your account. Lender-Placed Insurance is usually more expensive than insurance that you can get from your agent, and usually does not cover household belongings. Therefore, you are much better off if you maintain your own insurance coverage.
Preforeclosure Notice / Notice of Default
Typically, after 3 months of missed mortgage payments, but can be affected by state laws.
If you fail to pay a specified number of months on your mortgage, you will receive a legal notice from your servicer that you’re in default of the mortgage and the process of foreclosure has begun. The notice will typically request you to contact them to become current—either by paying the amount past due or by pursuing a non-foreclosure option to resolve the situation, such as Loss Mitigation. If you find yourself in this situation, it’s important to discuss your options with your servicer.
Upon request and qualification
If you experience a significant financial hardship that interferes with your ability to continue your mortgage payments, you will receive paperwork from your servicer regarding “loss mitigation.” You can and should reach out to your servicer as soon as you are aware of your financial difficulty. Once you apply for help, your servicer will try to provide you with options to help you stay in your home or leave your home without foreclosure. Your servicer wants to prevent foreclosures if at all possible.
The options your servicer has to help prevent foreclosure are determined by the actual owner of your loan. If this sounds like you, we recommend immediately reaching out to your servicer. You may also benefit from talking with a Department of Housing and Urban Development (HUD)-certified housing counselor. During this time, you may receive communications from third parties who will claim to help you prevent foreclosure. Protect yourself from scams and only work with trusted sources.
Notice of Error / Request for Information
Upon submission of notice or request
If you think your servicer has made a mistake and have not been able to resolve the matter through the customer service line, you can send a specific notice to your servicer called a Notice of Error or a Request for Information. You will usually find a specific address on your monthly account statement listing where to send Notices of Error or Requests for Information.
If you have a simple question about your account or if you are experiencing financial hardship, call your servicer right away. You may also receive Notices of Error Corrections if the Servicer has discovered and corrected a mistake. Errors can range from not accepting a payment that meets the requirements to an incorrect charge to your account.
Early Intervention Notice with Delinquent Borrowers
Your servicer will let you know if and when your mortgage payment is late. For most loans, they are required by law to send payment reminder notices. The owners of the loans require the servicers to attempt to contact borrowers who have not made timely payments. If your payment is not paid within the grace period (usually 15 days), you will receive notice of a late fee added to your account on your monthly account statement.
Continuity of Contact with Delinquent Borrowers
If you’re still unable to make payments after the first notice of a late payment, your servicer will continue contacting you to help ensure that you will pay on time or seek home retention options, if applicable. If your payment is 45 or more days overdue, or you do seek help, your loan will be assigned to a person or team of people who specialize in home retention options.
They want to prevent your loan from going into default/preforeclosure. If you’re having financial difficulties, it’s important that you stay in contact with your servicer in order to make the most of every opportunity to retain your home.
What else do I need to know about mortgage servicing documents?
You will receive many communications from your servicer throughout the duration of paying off your mortgage. It’s important that you read through each document carefully, save everything you receive and respond to them as soon as possible. We discussed many of the documents you could receive, but there are some that we may have missed. If you receive a document that you don’t understand, feel free to ask your servicer questions.
If you experience financial difficulty, you should talk to your servicer to see how they can help you. There are several options that exist to help keep people in their homes. The Department of Housing and Urban Development (HUD) maintains a list of certified housing counselors you can trust to help you:
Please be wary of any other parties who tell you they can promise a loan modification or prevent foreclosure, and never make your mortgage payment to anyone except your servicer. There are scams out there that prey on people with financial difficulties. Research with the help of trusted sources before you provide anyone with your information.
Our experts can help. Contact us today to get answers to your questions.
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