How Regulation Z protects borrowers with Mortgage Servicing Transfer Disclosure
Mortgage loan is quite the popular word in the real estate jargon. Borrowers decide to borrow money from lenders for a home, and make payments to the servicers or sell off the property.
But at times, lenders change. The ones servicing the mortgage loan changes hands. The change in ownership could be due to various reasons, but in order to protect the borrower from unnecessary trouble, there exists Regulation Z, which enforces the TILA Act.
The Truth in Lending Act basically requires the lender to disclose basic information to the borrowers about the change of ownership, which is to be put on the Mortgage Servicing Transfer Disclosure document.
Information on the disclosure
This information primarily includes:
- The loan identification number.
- Name and address of the new lenders or servicers.
- Contact details of the new lenders or servicers.
- Date of transfer of the loan.
- Location of the transfer of loan.
It must be sent to the borrower at least 15 days before the transfer by the old servicer and within 15 days by the new party.
How it helps and protects the borrower
This supply of information about the new lenders or servicing authority helps the borrowers in many ways For example; it makes sure that the borrower is not paying the same servicer even after change of ownership.
Also, it also prevents late fine notices which might be an attempt by the pervious servicer to extract undue payments.
So mortgage loan servicers must be highly diligent in making the Mortgage Servicing Transfer Disclosure available to the borrower in order to prevent any legal issues, and to maintain proper decorum as well.