Oct 21, 2013

Tip 32-2013: What Happens to a Short Sale When the Mortgage Servicer Changes

A servicing release is a standard lender practice that often throws a wrench in the cog of negotiating a short sale. As part of normal servicing, investors may decide, for a variety of reasons, to release or transfer servicing from one lender to another. This transfer can occur on first, second, or stand-alone liens and can impact a short sale in a number of ways:
  • Lenders quote a time of 7-10 days (some say up to 20 days) for a transfer to be complete. As a result borrowers and authorized third parties may not be able to access the loan right away with the new servicer
  • Although some lenders say that all documents associated with the account are transferred, don't be surprised if you have to resubmit documents to the new servicer
  • Short sale negotiators may have to submit new lender-specific forms, like lender-specific authorizations or financial worksheets 
To prepare for the chance of a service release, homeowners should continue to open all mail associated with the loan(s). Lenders will send notices to inform of a future transfer date. Homeowners should inform the Short Sale negotiator of any impending transfer and should supply new servicer contact information and new loan number as soon as they are available. The Short Sale negotiator should contact the new servicer as soon as possible to determine what is required in the new servicer's short sale package. 

It is important to remember that while service transfers can slow down the process of negotiating a short sale, transfers are normal and happen frequently. With a little extra patience, the parties involved in the short sale will be able to persevere after a loan transfer.  

Contact me at 434-951-0858 or Tucker@TGBLaw.com if you have questions.  Thank you for allowing us to send you this email.      

William D. Tucker, III   
Charlottesville, VA 434-973-7474 | Lake Monticello (Palmyra, VA) 434-589-3636       

1 comment:

  1. home owner has the money ti pay the mortgage and can't show any reasons why he should not pay mortgage. I have read your post and got a helpful information. Thanks for sharing a good post about mortgage short sale.