Transferring loans during the loss mitigation process heightens risks to homeowners, including the risk that documents and information might not be accurately transferred. Incompatibilities between servicer computer platforms can cause the new service to fail to identify and honor in-place loss mitigation agreements.
Additionally, some servicers fail to honor the terms of in-place trial modification agreements after transfer. Some homeowners who have completed trial payments with the new servicer nevertheless encountered substantial delays before receiving a permanent loan modification. The delay causes substantial injury because trial payments are less than the regular payments, and interest continues to be charged on the unpaid principal balance. I explained this problem in Time Is Not On Your Side.