We recently acquired another Bank. That bank sells the majority of it's loans to Freddie, the Bank services the loans on behalf of Freddie. Are we required to send the Mortgage Transfer notice to those customers, or only to those that we truly own?

Thanks.

It's all about informing the mortgagor of the change in servicer.

Red Sox Fan - Are you talking about the Mortgage Transfer Disclosure required by TILA (1026.39), or the Notice of Servicing Transfer required by RESPA (1024.33)?

I suppose either way in your scenario you probably wouldn't be sending either notice. The TILA notice is required to be sent be the new owner of a mortgage loan (so when ownership of the legal title changes hands), while the RESPA notice relates to just the change in servicer. In your example, it doesn't sound like the servicing ever changes, so you wouldn't send the RESPA notice, and you are not the new owner, so wouldn't send the TILA notice.

Here is what RESPA says about mergers - it hinges on whether anything is changing (address for payments, etc.):

(b) Notices of transfer of loan servicing. (1) Requirement for notice. Except as provided in paragraph (b)(2) of this section, each transferor servicer and transferee servicer of any mortgage loan shall provide to the borrower a notice of transfer for any assignment, sale, or transfer of the servicing of the mortgage loan. The notice must contain the information described in paragraph (b)(4) of this section. Appendix MS-2 of this part contains a model form for the disclosures required under this paragraph (b).

(2) Certain transfers excluded. (i) The following transfers are not assignments, sales, or transfers of mortgage loan servicing for purposes of this section if there is no change in the payee, address to which payment must be delivered, account number, or amount of payment due:

(A) A transfer between affiliates;

(B) A transfer that results from mergers or acquisitions of servicers or subservicers;

(C) A transfer that occurs between master servicers without changing the subservicer;

(ii) The Federal Housing Administration (FHA) is not required to provide to the borrower a notice of transfer where a mortgage insured under the National Housing Act is assigned to the FHA.

Thank you all for your replies. I am talking about the Mortgage Transfer Disclosure specifically. We've already taken care of the Servicing Transfer Notice. My question is specific to the Mortgage Transfer Disclosure...since we sell the majority of the loans to Freddie Mac, they then own that mortgage, correct, and no Mortgage Transfer notice would be required on those loans? Want to be sure we are doing the right thing.

Red Sox Fan - Given that the Mortgage Transfer Disclosure is required to be provided by entity that acquires legal title to the debt obligation, I don't see that you as the seller would ever need to provide the notice, whether or not the sale to Freddie Mac would qualify or not.

Kathleen B - Am I missing something about why we would be looking at RESPA and not TILA? I know the two disclosures are often combined, but that doesn't appear to be the case here (and I don't think would impact the requirement of when to send it regardless).

Thanks all-