HomeAbout UsNewsroomA Veteran’s Guide to Understanding Mortgage Servicing in 2026

A Veteran’s Guide to Understanding Mortgage Servicing in 2026

This guide explains what happens when your VA loan servicing transfers to a new company, including why transfers occur, what federal protections apply during the transition, and practical steps to manage the change.

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For most Veterans, the mortgage experience does not end at the closing table. It continues, month after month, through something called servicing.

Servicing is the steady work that keeps a home loan running. It’s the company that sends your statements, receives your payments, manages your escrow account, and answers the phone when you have a question or a problem. If you ever face a hardship or fall behind, the servicer is the first line of help.

From time to time, that servicing responsibility can move from one company to another. The loan itself does not disappear. The VA guaranty does not change. What changes is the company that handles the billing and the customer service.

Across the mortgage industry, this movement is routine. Federal data show that servicing rights are often transferred when loans are sold, pooled into mortgage-backed securities, or brought under new management. The Consumer Financial Protection Bureau (CFPB) has issued detailed rules to govern those transfers and to protect borrowers while they take place.

NewDay USA services many VA loans and has guided thousands of Veteran families through these transitions. In this guide, we will explain how servicing works, why transfers occur, what the law requires, and how NewDay supports Veterans from the first payment through the last.

What Mortgage Servicing Actually Is

When a Veteran closes on a VA loan, one company may own the loan, and another may be responsible for servicing it. The “owner” of the loan is the investor. The “servicer” is the company you see in your mailbox and on your bank statement.

The servicer is responsible for:

Sending monthly statements and year-end tax and interest forms
Collecting principal, interest, and escrow payments
Paying property taxes and homeowners insurance from the escrow account
Responding to questions, disputes, or hardship requests
Working with the borrower and the Department of Veterans Affairs if payment trouble arises

The VA describes servicing as the day-to-day management of a loan after it has been originated and guaranteed. The agency publishes a Servicer Handbook and uses its VA Loan Electronic Reporting Interface (VALERI) system to monitor how servicers manage VA loans, report performance, and resolve delinquencies.

Servicers can be banks, non-bank mortgage companies, or specialized firms that handle servicing only. NewDay USA, for example, both originates and services VA loans and appears on national lists of leading VA lenders by volume. For a Veteran, this means that in many cases, NewDay is the company you deal with from the time you apply until the day your loan is paid off or refinanced.

Why Servicing Transfers Happen

A servicing transfer occurs when one company stops handling your billing and another takes over. The reasons are largely business and regulatory. Common examples include:

Loan sales and securitization. When loans are sold or placed into mortgage-backed securities, the buyer may decide to service the loans itself or appoint a new servicer.
Portfolio and capacity management. Large servicers sometimes sell a block of loans in order to reduce concentration in a certain product, free up capital, or adjust their operational footprint.
Compliance and performance. Regulators and investors track delinquency data. If a servicer falls short, some or all of its loans may be transferred to a different company.

In every case, the VA loan documents remain the same. A servicing transfer does not change your interest rate, loan term, or VA guaranty. Those protections are built into federal law and are restated in the notices you receive.

The VASP Program and What Its Wind-Down Means

The Veterans Affairs Servicing Purchase program, or VASP, is worth a closer look, because it has influenced many VA servicing decisions in recent years.

The Department of Veterans Affairs launched VASP as a tool of last resort. When other loss-mitigation options failed, the VA could purchase an eligible delinquent VA loan from the servicer, modify it, and keep the Veteran in the home whenever possible. These loans involved serious hardship and a real risk of foreclosure.

In 2025, the VA announced that it would stop accepting new loans into VASP. Existing cases would continue under wind-down guidance, but the entry door for new loans closed.

For borrowers, the picture is clear:

If your loan was brought under VASP, you likely saw a servicing transfer to VA or to a servicer selected by VA. Your communications came directly from VA or that designated servicer, and any modification offers followed the VASP rules.
If your loan became delinquent after VASP closed to new cases, your servicer uses other VA and investor options such as repayment plans, forbearance, and standard loan modifications.

In this environment, NewDay USA’s role is both educational and supportive. Our teams help Veterans read and understand each letter, explain what programs apply in their situation, and encourage continued contact with both the new servicer and VA if hardship continues.

What the Law Requires During a Servicing Transfer

When servicing transfers, federal law sets a clear sequence of notices and protections. These rules come from the Real Estate Settlement Procedures Act (RESPA) and its implementing regulation, Regulation X.

The main protections are:

Advance or timely notice. In most cases, both the old and the new servicer must send written notices identifying the effective date of the transfer, the name and contact information for each servicer, and the date when the old servicer will stop accepting payments. In some situations, the notice may arrive shortly before or within 30 days after the effective date, but it must arrive in writing.
No change in core terms. The transfer notice must state that the servicing transfer does not change any term or condition of the mortgage, except those related directly to servicing. Your interest rate, principal balance, and amortization schedule remain the same.
Sixty-day protection for payments. For 60 days after the effective transfer date, if you send a timely payment to the old servicer instead of the new one, the new servicer may not treat that payment as late and may not charge a late fee.

The CFPB explains these rights in its homeowner guidance. Borrowers are encouraged to watch their mail, confirm the new payment address, and adjust automatic payments, but they have a built-in grace period while the transfer settles.

What Veterans See and Experience During a Transfer

From a Veteran’s perspective, a typical VA loan servicing transfer looks like this:

You receive a letter from your current servicer stating that servicing is being transferred, with an effective date and contact information. This is often called the “goodbye letter.”
You receive a letter from the new servicer with its payment address, phone numbers, website, and the date it will begin taking payments. This is often called the “hello letter.”
You have a 60-day grace period in which timely payments mistakenly sent to the old servicer cannot be treated as late. Payments may be forwarded or returned with instructions, but you should not be penalized for sending them to the prior address.
If your loan has an escrow account, the new servicer will send updated escrow disclosures and continue paying taxes and insurance.

NewDay USA adds another layer of support for the Veterans it serves. Our servicing teams explain transfer letters, confirm due dates, and help borrowers verify that online portals and automatic payments reflect the correct information. When NewDay is the transferring servicer, we work to send clear notices and to coordinate with the receiving company so that payments and escrow balances move accurately and on time.

How NewDay USA Supports Veterans Through Servicing Changes

Servicing stability is one of the reasons NewDay USA invests heavily in VA loan expertise. NewDay appears among the top national VA lenders by loan count and has built specialized teams that understand both origination and long-term servicing requirements.

Support during servicing transfers includes:

Dedicated Veteran support teams. Borrowers can speak with NewDay customer care specialists who handle questions about transfer notices, payment addresses, escrow changes, and online access.
Proactive communication. Whenever permitted, NewDay explains upcoming transfers in advance and reminds borrowers of the 60-day protection period for payments sent to the old servicer.
Monitoring for errors. If a Veteran reports a mismatch in payment posting, escrow balances, or year-end tax reporting shortly after a transfer, NewDay investigates and coordinates with the receiving servicer to correct the record.
Education on hardship options. For borrowers already struggling when a transfer occurs, NewDay teams explain available loss-mitigation tools, point Veterans to VA resources, and encourage early contact with the new servicer so that a plan can be set up without delay.

The aim is to ensure that a change in servicer never feels like a loss of support.

Practical Tips for Veterans When Servicing Transfers

There are several practical steps every Veteran can take to stay in control during a servicing transfer:

Read every letter. Do not ignore mail from your current servicer, a new company, or the VA. Transfer letters clearly state the effective date and the new payment address.
Verify payment instructions. Before sending the first payment to the new servicer, confirm the routing and account information on the new statement or by calling the number listed in the “hello letter.”

Update automatic payments. If you pay through online banking or automatic debit, update the payee name, address, and account number as soon as the transfer is effective.
Keep copies of statements and letters. Retain your last three statements from the old servicer and the first few from the new one. Together, they provide an audit trail if questions arise about balances, escrow, or payment history.
Watch escrow and taxes. When annual tax and insurance bills come due, confirm that the new servicer pays them on time and in the correct amount. If something looks wrong, contact the new servicer and, if necessary, submit a written “notice of error”.
Ask questions quickly. If you are unsure about any part of the transfer, call the new servicer. If NewDay originated or serviced your loan, you can also contact NewDay customer care for guidance. Problems are easiest to fix early.

A Stable Path Forward

Servicing transfers are a normal part of the modern mortgage system. To a Veteran homeowner, they can feel disruptive, especially when letters, websites, and account numbers change, but federal rules protect payments during the transition. Core loan terms remain intact. The Department of Veterans Affairs continues to supervise how servicers handle loans backed by the VA guaranty and expects them to work with Veterans in good faith.

NewDay USA brings its experience as a leading VA lender to this part of the journey as well. From origination to servicing and through any transfer that may occur, our mission is to stand with Veteran families, explain each step in clear language, and help preserve the stability that homeownership is meant to provide.

Frequently Asked Questions

Will my payment amount change when servicing transfers?

The transfer itself does not change your interest rate or your principal and interest payment. Over time, your total monthly payment may change if your property taxes or insurance premiums change and your escrow account is adjusted.

Can my interest rate change because my loan was transferred?

No. A servicing transfer does not alter the terms of your loan, just the company managing it.

What if I pay the wrong servicer by mistake?

During the first 60 days after the transfer, if you send a timely payment to the old servicer, the new servicer cannot treat it as late. The old servicer must either forward the payment or return it with clear instructions. Monitor your statements to be sure the payment is applied.

What if my loan is delinquent and then transfers?

If your loan is already behind, the transfer does not erase the delinquency. The new servicer, however, must honor any loss-mitigation agreements in place and must review you for assistance if you apply.