Military families often ask why their VA loan was sold to another company. Loan transfer is a common scenario, after closing on a VA mortgage. A VA loan may be sold to another company for servicing. The VA-approved lender that originated and funded your mortgage might not be in the practice of servicing loans. Lots of lenders sell their loans to investors to recover funds to make new loans. When a VA loan is transferred, the borrower should know that all the terms will stay the same. It’s just that a different company will be receiving payments and handling the escrow accounts associated with the VA mortgage.
When a VA mortgage is transferred to a different company, the borrower will receive written notifications from both the old company and the new company. The VA loan transfer will not change the interest rate or balance of the loan, payment amount, payment date, or any other terms of the loan. If a VA-approved lender plans to sell your loan, a document regarding the possible sale of your loan is required at closing time. A servicing disclosure form at the time your VA loan is closed will explain the lender’s guidelines on selling and transferring mortgages and how often they have done it on average, over the past three years. This disclosure is federally mandated.
It is likely that your VA loan could be transferred and serviced by another company sometime during the life of the loan. If this happens, you can double check to see that the new company is managing everything right. A VA borrower might ask if escrow payments are still accumulating and if the taxes and insurances are being paid out of them on time. For 60 days following a VA loan transfer, the new servicer is not allowed to report payments as late if they are sent to the previous servicer.
Borrowers should be careful to submit payments on time and to the proper servicer. Sending payments to the previous servicer is a problem that can occur after mortgages are transferred. Whether a VA loan is sold or not, knowing the facts can assure that VA borrowers stay on top of their finances.
For more information on VA home loans and VA loan transfers contact a VA Loan Professional.