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#425374 - 09/20/05 06:45 PM Borrower transfers loan to new bank
swiggles Offline
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swiggles
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Suppose a borrower wishes to move his loan business to a new bank. The borrower initiates the move of a loan subject to RESPA. The existing bank assigns the note and lien to the new bank and files a transfer of lien in the real estate records. For a scenario such as this, a "Notice of Transfer of Loan Servicing" is not required, correct?!

It would be silly to have to notify the borrower when the borrower initiated the move and signed the papers to do so.
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#425375 - 09/20/05 07:26 PM Re: Borrower transfers loan to new bank
Dan Persfull Offline
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Dan Persfull
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Posts: 47,517
Bloomington, IN
I agree it's silly, but show me an exemption for this type of servicing transfer in 3550.21.
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#425376 - 09/20/05 07:53 PM Re: Borrower transfers loan to new bank
swiggles Offline
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swiggles
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OK. So the borrower initiates the move of his loan to a new bank. The old bank is supposed to give the notice and then wait 15 days before transferring the loan? The borrower will love that!....especially if he's gonna get a better rate at the new bank. I've never heard of giving the notice in a borrower-initiated transfer. Am I alone in this?

All this time, I've had the mistaken belief that this only applies to loans which are assigned, transferred or sold in which the borrower has no say in the matter.
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#425377 - 09/20/05 08:06 PM Re: Borrower transfers loan to new bank
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
I agree - but the fact remains you are transferring the servicing - unless you can treat this as a payoff instead of a sale.

You might look at the following to see if it will bail you out:

ii) The Notice of Transfer shall be delivered to the borrower by the transferor servicer or the transferee servicer not more than 30 days after the effective date of the transfer of the servicing of the mortgage servicing loan in any case in which the transfer of servicing is preceded by:

(A) Termination of the contract for servicing the loan for cause;

You are transferring your servicing for cause, the cause being at the borrower's request. (Don't know if it will hold water, but it should be at least a slow leak.)

BTW, with this being an isolated case - I'd probably lose this one in the stack somewhere.
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#425378 - 09/20/05 08:46 PM Re: Borrower transfers loan to new bank
Beagles22 Offline
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State of confusion
Such advice Dan!
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#425379 - 09/20/05 08:55 PM Re: Borrower transfers loan to new bank
swiggles Offline
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swiggles
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Posts: 7,351
Quote:

......unless you can treat this as a payoff instead of a sale.




Just for the sake of argument. I don't view it as a sale, transfer or assignment. It's a borrower's decision to move his business to a different bank.

Ok...I know. The term "assignment, sale or transfer" is not defined other than what it does NOT include.

Poopie!!!

I hate it when you're right!

I am still interested in knowing if there are others out there who are just as much in the dark as I am. C'mon, speak up.
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