It can come out of nowhere: a letter or email informing you that the lender you originally signed with take a loan no longer manages your account. Instead, a different company takes over and you will now be working with the new ones.
Why is your managing agent or lender breaking up with you? Is this something you did wrong? What is happening now?
“If you get a notice that your loan has been sold or your managing agent is changing, don’t take it personally,” says Amy Loftsgordon, chief foreclosure, collections and debt management editor at Nolo , a do-it-yourself legal book publisher. and software, by e-mail.
The fact that your loan changes hands – whether it’s a mortgage, student loan, or some other type of consumer debt – is common, experts say. A business may choose to offload tens of thousands of loans in a set, depending on a business decision, not your worth as a consumer.
But if this is just a business for the company, working with a new loan manager can be disruptive to your personal financial life and loan repayment plans. Read on to learn about the steps you can take to make the transition easier.
Know the difference between a manager and a lender. Carefully read all communications you receive to find out whether the company that comes your way is the loan manager or the loan holder.
Your agent manages your loan and is responsible for collecting payments, answering your phone calls, and keeping track of your balance. This is the company you are connecting with. If that changes, you’ll start making payments on a new website and directing your questions to a new service company.
The loan holder is the company that holds your debt. You may never interact with this group at all. It simply keeps your loan on its balance sheets. Sometimes your loan manager and your lender are the same company. Often they are not.
A third category to note is a debt collector. If you receive messages from a collection agency, it may mean that you have defaulted on your debt and the responsibility for collecting the payments owed has been transferred to a specialized group.
If you can’t tell what type of business sent you the letter, call them and ask, Loftsgordon says.
Expect an alert. Depending on the type of loan, you may receive a notice that your loan manager or landlord has changed. Regulations governing the appearance of notifications vary depending on the industry you are working with.
With respect to mortgages, “Federal laws require that homeowners be notified in the event of transfer of loan ownership and transfer of management rights,” said Geoff Walsh, lawyer at the National Consumer Law Center. If a mortgage lender sells the loan to a new owner, the notice must arrive within 30 days of the transfer, with information about the identity and contact details of the new owner, Loftsgordon says. If the Mortgage Manager changes, you should hear from the old Mortgage Manager within 15 days of the transition and the new one within 15 days.
Your student loan The issuer should also notify you when a new manager takes over the loan, which can happen for a variety of reasons, including when a student loan changes status, such as going from good to default. Communication is usually done by mail and email, says Ashley Norwood, community outreach manager at American Student Assistance, a Boston-based nonprofit. “It has to come from your original manager and the loan holder first,” she says. Keep in mind that a large portion of federal student loans are owned or held by the US Department of Education, but private student loans can come from a range of lenders in the market, who can also transfer ownership. .
Make sure it’s not a scam. If the alert looks suspicious, or the company offers debt relief for a fee, make sure you’re dealing with a new, legitimate loan company, not a financial scam.
One of the best ways to make sure your loan has really changed hands is to phone your old loan manager and ask if your account has moved to the new company. Your former repairman should be able to confirm the transition. Federal student loan borrowers can log into their accounts on the National Student Loans Data System, or NSLDS, which lists their manager’s name, says Adam S. Minsky, a Boston-based loan attorney. students.
Carefully track your payments throughout the transition. There’s not much you can do when your loan holder changes. But when your server changes, you need to be extra vigilant throughout the transition, experts say. “If any of your payments fall through the cracks during the transfer, you’ll need to be able to prove when and where you made it,” Loftsgordon says.
A trap to avoid is to assume that automatic withdrawals will transfer to your new server. “A lot of times borrowers end up missing a payment because they think, ‘I don’t have to worry about this,’” says Norwood.
For student loan borrowers, Minsky recommends keeping your own on-time payment records and uploading this data from your former manager before the transition. This way, if you are counting payments to student loan repayment plan such as utility loan forgiveness, which requires 120 on-time loan cancellation payments, you can independently verify that all have been tracked and counted correctly in your total.
You are probably stuck with the new business. You don’t have much choice as to who owns your loan and who is servicing it. Yes, you can choose to borrow from a specific company when you initially take out the loan. But once you sign on the dotted line, you usually lose your right to control who the lender sells the loan to or the management rights to. When it comes to mortgages, for example, “two things homeowners don’t really have control over: who owns their loan – the loans themselves are often sold – and they don’t have control.” on who is servicing the loan, ”says Walsh.
One way for student loan borrowers to change their loan manager is to consolidate federal loans. During the process, you can choose which server you will be working with, experts say. But, of course, this service agent could change at any time on the road.
When you have issues with a new maintenance company, there are steps you can take to resolve the issue. If it’s a student loan, take the complaint to a manager at the service company and get a direct number, so you don’t re-explain your complaint every time you call. You can contact an ombudsman, a student loan advocate, with the service company or discuss federal student loans with the US Department of Education ombudsman, Norwood says. Borrowers struggling with private student loans can file a formal complaint with the Consumer Financial Protection Bureau. People who are dealing with unscrupulous new mortgage managers can also contact the CFPB. According to experts, taking legal action is also an option in extreme cases, but it is not a step to be taken lightly.