You may assume that the mortgage company you begin with will service your loan throughout its life, but the fact is that mortgage servicing rights are often bought and sold. Before discussing what rights you have with respect to mortgage servicers, we will first provide a brief explanation about what they do.

Mortgage servicers collect your payments each month and manage your escrow account. Your escrow account is a fund established by your lender to pay property tax and insurance costs for your house each year. When your escrow account is established, your servicer must give you a statement detailing the estimated taxes and payments over the next 12 months. Servicers are also required to give you an annual statement detailing the activity of your escrow account, including your balance and payments.

The National Affordable Housing Act of 1990 has a number of requirements dealing with the buying and selling of servicing rights. First, when you apply for your mortgage, your lender must provide you with a disclosure statement. The disclosure must tell you whether the lender plans to sell your mortgage's servicing immediately; whether the servicing can be sold at any time; and the percentage of mortgages servicing has been sold for in the last three years. The disclosure statement also provides information about servicing procedures, transfer practices, and how to resolve complaints.

Mortgage companies are also required to give you notice that your servicing is about to be sold. Notice is due 15 days before the effective date of the transfer, or the date when your first payment to the new servicer is due. In addition to your old servicer sending notice, your new servicer must send notice as well.

Your new servicer should tell you its name and address, the date the new servicer will begin accepting payments, a statement telling you that terms and conditions of your mortgage will remain the same, and information about the grace period. The grace period is simply a device that keeps you from being charged a late payment fee if you mistakenly send payment to the wrong place within 60 days after the transfer.

Finally, the law requires you to respond promptly if you believe you have been charged any penalties or late fees in error. After your written response, your servicer must acknowledge your complaint within 20 business days, and correct your account or determine it is accurate within 60 business days. Your servicer must tell you what action it took and why. If you still have a complaint, you can contact the Department of Housing and Urban Development (HUD) and file a complaint under the National Affordable Housing Act.