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Loan Servicing Transfer Practices and Requirements

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Loan Servicing Transfer Practices and Requirements

If you are transferring the servicing of your loans, there are a number of things that must be done to remain compliant during the transfer.

You must give written notice of that transfer to the borrower.

The present loan servicer must send a notice in writing of the assignment, sale, or transfer of the servicing not less than 15 days before the effective date of transfer.

The new loan servicer must also send a notice within 15 days after the effective date of the transfer.

Both servicers may combine this information in one notice, so long as the notice is sent to the borrower within 15 days before the effective date of transfer.

The law allows a delay in the time (not more than 30 days after a transfer) for servicers to notify a borrower upon the occurrence of certain business emergencies, such as natural disasters.

Notices must contain certain information.

They must contain the effective date of the transfer of the servicing of the loan to the new servicer, the name, address, and toll-free or collect call telephone number of the new servicer, and the toll-free or collect call telephone numbers of a person or department for both the present servicer and your new servicer to answer any questions. During the 60-day period following the effective date of the transfer of the loan servicing, a loan payment received by the old servicer before its due date may not be treated by the new loan servicer as late, and a late fee may not be imposed on the borrower.

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