Q: Is it possible to change my loan servicer? My refinance was done by a national mortgage lender. They immediately transferred it to a well-known loan servicer. However, my monthly payments from my bank were returned.
I had three conversations with the servicer's customer service representatives, and we tried to figure out why the payments were returned. The letter I received from the loan servicer from my closing gave me an address where I should send my payments, but I was told there was a closer address that I should use.
My first payment to them was returned, and after discussing this with them I asked if I could resend it and it was posted. All subsequent payments were sent back, which I then paid on the phone (to stay current) and was advised that it would take 20 days to investigate the problem.
The last two calls postulated a variety of suggestions about how this went wrong, including how the bank might have made an error (which I think is what happened) or the suggestion that I might have incorrectly used a bad loan number, or had the wrong P.O. Box number on the payments.
Other than the suggestion that they made a mistake, none of this makes any sense. I’d appreciate hearing about your experiences and any of your insights as to whether I can change servicers, or how I can rectify this experience.
A: No, you can’t choose your loan servicer. The loan servicer is chosen by the lender that holds your loan and, despite the ordeal ahead, you must deal with them and their forms to get your loan paid on time.
At one time, Sam was a firm believer in making payments through his bank to the mortgage company. But in the past year, he has decided to set up direct payment though the party receiving the payment. That’s because stories like yours are rampant.
Your best bet is to call the loan servicer and have them auto-debit your account directly. What will happen is the servicer will pull the money from your account automatically, and you won’t have to worry about any post office delivery problems, incorrect addresses or other processing issues on the servicer’s end.
Bank checks have a way of drifting off course. Sam recently sent a payment from his online bank account for a sizable sum only to have that bill-pay check diverted (i.e. stolen), altered and cashed by the thief. It took four months to get that money back into his account, and in the meantime he had to pay that creditor separately for the amount owed. Now he pays via an auto debit.
If your bank has a way to electronically transfer money to your loan servicer, you should check that out first. Otherwise, you need to make sure that the information on the check going to the loan servicer has all the information needed to credit your account correctly.
For starters, when you fill out a paper check, send that check to the loan servicer in the provided envelope along with a copy of your statement. At a minimum, the information you need to have on the check sent from your bank is the loan number, your home address and the name of the borrower.
Without all of that information, the loan servicer may not be able to process the payment. Remember that some loan numbers begin with a bunch of zeros. If you are missing a zero or do not place the zeros, the machine readers at these loan servicers may bounce the check if they don’t recognize the sender.
If you’re extremely careful, you can try again to make your mortgage payment through your bank. Make sure you use the address on the payment coupon or monthly statement. Make sure the loan number is printed on the check along with your name and the property address. Usually you can add information to the bank autopay system that allows you to put that information in the memo line.
But it’s often safer to call the loan servicer and set up auto-debit so the money can be withdrawn from your bank account on a certain date before the payment is delinquent. Just be sure you’ll have enough to cover the auto-debit, so you aren’t charged an overdraft fee.
Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the chief executive of Best Money Moves, an app that employers provide to employees to measure and reduce financial stress. Samuel J. Tamkin is a Chicago-based real estate lawyer. Contact them through her website, ThinkGlink.com.