When the Press Democrat has optimistic headlines on the economy, it catches my eye and ear.    The headlines in the PD’s August 27th Business Section reads, “Home, car sales soar, bolstering economy.”  I delved into the article extracting the most important piece of information to me.  Alan Zibel from Associated Press reports “Sales of new homes surged to a seasonally adjusted pace of 433,000 in July from 395,000 in June, the Commerce Department said, providing another sign the housing market is bouncing back from the historic bottom reached early this year.” 

The “historic bottom” spoken in the past tense.  To a Realtor in the business of the housing market this is music to my ears. 

Economic devastation that many concur started with a mortgage industry gone wild is finally showing signs of recovery.  I see it in the field.  I hear it from Buyers, Sellers and other Brokers.  What am I seeing and hearing.  Activity.  Interest.  Multiple Offers in some areas.

Some areas are slowly waking up.  But other areas are on fire.  What’s the driving impetus.  Deals.  Great deals to be made. 

You have heard the saying, if you are waiting for the bottom of the market, you won’t know until the prices start going up.  Get ready.  Remember, “historic bottom reached early this year.”

According to the California Association of Realtors, approximately half of all mortgage loans are sold from one lender to another, often because the original lender is not equipped to collect payments, manage escrow accounts, pay taxes and insurance, respond to questions, and prepare payoff statements when the home is sold or refinanced.  Some borrowers may receive letters in the mail alerting them of the sale of their loan a few days after closing, while others may not receive a notice for years.

In the mortgage-industry, this is called a “transfer of servicing,” and is a common practice.  Borrowers should not be concerned about these changes, as the majority of lenders transfer their servicing rights to loans.  Generally, the selling of a mortgage loan from one lender to another is a smooth transition and does not impact the borrower.  Every so often though, there is a misstep by either the loan buyer or the loan seller.

Under the National Affordable Housing Act, when a mortgage loan is sold, the borrower is required to receive a “goodbye” letter from their current servicers at least 15 days before their next payment is due.  The letter must state the name, address, and telephone number of the new servicer; the date the old company will stop collecting payments; and the date the new company will start accepting them.  Under the Helping Families Save Their Homes Act, signed by President Obama on May 20, the new owner of the loan—which may or may not be the servicer—also must notify the borrower of the transfer within 30 days, known as the “hello” letter.

The “hello” letter should outline the same information as the “goodbye” letter sent from the former loan servicing company.  Borrowers should be cautious if they receive a “hello” letter without receiving a “goodbye” letter, as they may be the intended victim of a scam by someone who is hoping to unlawfully receive the monthly mortgage payments.  Concerned borrowers should contact their current loan servicer to verify if their loan has been transferred.  If it hasn’t, authorities should be notified immediately.

In most cases, a mortgage payment sent to the old servicer automatically will be forwarded to the new servicer for a brief amount of time, typically 60 days.  However, if payments are not sent to the correct servicer, they could become lost, and the homeowner may incur late fees.