Imagine you go to a Ford dealership, test drive a car, and then sign a contract to buy it. But as soon as the deal is done, they tell you you’re actually getting a Chevy, and the dealership across the street will be handling the details.
Or you go to a restaurant and order a steak, only to have the waiter tell you you’re going to get fish, and another restaurant will be preparing it.
Sound crazy? Not in the illogical world of finance.
If you own a home, you’ve probably had something similar happen to your mortgage. After weeks comparing rates and loan features, you decide on a lender, and go through the approval process. Then, maybe a month after the loan is funded you get a letter from the lender saying they have sold your mortgage to another “servicer”, and you will be doing business with them from now on. Goodbye.
The sophisticated financial types will tell you this is perfectly normal. Your mortgage stays the same. It has just been sold on the “secondary market.” Nothing to worry about.
Well, the problem is, the new “servicer” usually isn’t very good at “servicing.”
I recently had my mortgage sold and was told to start sending payments to a new “servicer,” a huge bank you would all recognize.
I’m still trying to straighten out a series of screw ups by this new “servicer,” including their inability to pay my homeowner’s insurance premium, even though the money was sitting there in the escrow account.