HELP! MY NEW LENDER TOOK MY MONTHLY PAYMENT BUT SAID I AM IN DEFAULT
Although your original lender may be a large bank such as Wells Fargo, Bank of America, or PNC Bank, it is common for these institutions to sell your mortgage to another company. They may continue to service your loan, or the servicing may also go to a new company. When your loan is sold, or the servicer changes, your loan information is also transferred from one computer system to another. Sometimes, not all of the information is transferred, or there is a mistake in the transfer. This is especially common if you have had a modification. While you have a written agreement and you have been making payments, this information may not be properly transferred to the new loan servicer and can result in the lender taking your money and saying that you have not paid.
By law, your new servicer must notify in writing within 30 days of taking over your loan. It is important to understand that if your mortgage is sold to a new loan servicer, you have rights. It is illegal for the new company to refuse payments, change the terms of the loan, payment amounts or interest rates.
There are situations where, after a loan is sold and the servicing is transferred, the homeowner continues to make modification payments, but the new servicer’s computer doesn’t know about the modification, and is expecting the payment amount that was being made prior to the modification. This can lead to the lender declaring default, threatening foreclosure and reporting a default to the credit reporting agencies and severely damaging credit. This is illegal.
