Debunking Common Mortgage Servicing Myths

Myth #1: Your mortgage servicer will never change. 

Fact: Mortgage loans may be transferred to other servicers for many reasons unrelated to you as a customer. A mortgage servicer does not necessarily own your loan but services it according to investor and/or insurer guidelines. Servicers manage the day-to-day aspects, like providing customer service, processing mortgage payments, managing escrow, providing statements and other loan related communications and reporting to credit bureaus.    

Myth #2: Your terms will change if your mortgage loan is transferred to a new servicer.   

Fact: If your loan is sold or transferred to a different servicer, you’ll be notified of the change in advance. The terms of your loan (interest rate, principal, etc.) will stay the same – the only changes are to whom you make your payment and any resources that the mortgage servicer provides. When your mortgage is with Carrington, you have access to an amazing customer service team, HomeAmp, our personalized homeownership portal tailored to you and your needs and our Mobile App. 

Myth #3: If you fall behind on your payments, you’ll immediately lose your home.   

Fact: Your mortgage servicer is your partner in managing your loan. If you experience hardship or financial difficulty, contact your servicer to make them aware of your circumstances and ask for information about mortgage assistance programs. From natural disasters to medical emergencies, you may have options such as: 

• Forbearance: An agreement that allows you to temporarily pause or reduce your mortgage payments when facing financial difficulties, such as job loss or unexpected expenses. During this time, no penalties or late fees are assessed, giving you the space to recover. At the end of the forbearance period, you’ll need to catch up on the missed payments or request further assistance. 

• Repayment plans: An agreement outlining how to catch up on missed or overdue payments over a specific period. Payments will be higher than your normal monthly mortgage amount, as you’ll pay your monthly payment plus a portion of the past due amount until the loan is caught up. By making consistent payments, you can stabilize your financial situation while keeping your loan in good standing. 

• Loan modification: A permanent change to the original terms of a mortgage loan to make your monthly payments more manageable. This can include adjustments to the interest rate, placing past due amounts at the end of the loan or extending the loan length. While the goal is to lower monthly payments, your monthly payment may increase in a higher interest rate environment. 

Myth #4: Paying off your mortgage loan early will result in a penalty.   

Fact: In most cases, paying off your mortgage loan early does not result in a penalty. However, it depends on the specific terms of your loan agreement. Some mortgages may have prepayment penalties, while others do not.    

A prepayment penalty is a fee charged by the lender if you pay off your mortgage early. This penalty could be a flat fee or a percentage of the remaining balance on the loan. These days, a low percentage of loans have prepayment penalties, and any fees would have been disclosed to you when you took out your loan.  

There’s a lot of information out there, and it can be tough to sift through everything. Carrington is here to help guide you! We have many online resources to help you manage your account, from paperless access to your documents to easy digital payments. Download our mobile app from the App Store or Google Play store to make it even easier to manage your account.