Loan Servicing: What to Expect After a Real Estate Closing
After a loan closes, it is assigned to a loan servicing agency. This servicer manages and maintains the monthly mortgage payments as well as the impound account (if applicable) for property taxes and homeowners insurance on behalf of the borrower.
What Is Loan Servicing?
Loan servicing refers to the administrative process of managing a loan after it has been disbursed. This includes:
- Collecting monthly payments
- Managing escrow for taxes and insurance (when applicable)
- Tracking principal and interest
- Sending annual tax forms
- Providing customer support
The servicer may be the original lender or the loan may be transferred to a new company.
Why Servicing Transfers Happen
A servicing transfer means a new company will take care of payments and account management. The loan terms—rate, payment, and length—do not change.
Transfers commonly occur within the first 30-90 days after closing, but they can happen at any point over the life of the loan.
How Borrowers Are Notified
Federal regulations require two notices when servicing is transferred:
The “Goodbye Letter”
Sent by the current lender to the borrower announcing that they will no longer manage the loan and informing you who the new servicer will be along with the new contact information.
The “Welcome Letter”
Sent by the new loan servicer providing the following information:
- Payment address
- Online payment portal login instructions
- Customer service contact information
- Effective date of transfer
Grace Periods & First Payment Timing
During a transfer, a 60-day grace period protects borrowers from late fees or negative credit reporting if a payment is sent to the previous servicer. Payments must be forwarded without penalty.
Escrow Accounts After Closing
If the loan includes an escrow account, the servicer manages the funds for property taxes and homeowners’ insurance and the borrower can expect the following:
- A yearly check to update tax or insurance changes
- A possible escrow shortage or extra funds
- Automatic payment of taxes and insurance
If the loan is transferred, the entire escrow balance follows the loan to the new servicer.
Where to Find Payment History & Tax Documents
Every servicer provides an online portal where homeowners can view:
- Payment history
- Escrow balance
- Year-end 1098 Mortgage Interest Statement
- Monthly statements
- Tax/insurance disbursements
If servicing transfers mid-year, the borrower may receive two separate 1098s tax forms for mortgage interest (one from each loan servicer).
Common Post-Closing Questions
Why was my loan transferred?
Transfers are standard business decisions and do not affect the loan terms.
Why did my payment change?
Escrow adjustments for taxes or insurance may result in a slight payment change.
Do I need to notify my insurance company?
Yes, homeowners’ insurance policies must list the correct lender and servicer after a transfer.
What if I receive multiple letters?
Follow only the official notices tied to your closing documents. If unsure, call the number in your closing package.
The Bottom Line
Loan servicing is a routine part of homeownership, and transfers are common. Staying alert to notices, confirming payment details, and monitoring escrow changes helps keep everything running smoothly. For questions, please contact Bluefire Mortgage Group at (760) 930-0569.
