RESPA Letter

A RESPA letter is the borrower notification required by the Real Estate Settlement Procedures Act (RESPA) whenever the servicing of a mortgage loan is transferred from one servicer to another. In practice, the term refers to two separate documents: a goodbye letter sent by the outgoing servicer and a hello letter sent by the incoming servicer. Together, these letters ensure the borrower knows who now holds and services their loan, where to send payments, and how to contact the new servicer with questions or disputes.

The Two RESPA Transfer Letters

The Goodbye Letter

The goodbye letter is sent by the previous servicer (or the seller of the loan) at least 15 days before the servicing transfer date. It notifies the borrower that the servicing of their loan is being transferred to a new company. The letter must include:

• The effective date of the transfer
• The name, address, and toll-free telephone number of the new servicer
• A statement that the transfer does not affect the terms of the loan
• Information about how the borrower can continue to assert their rights (including the right to submit a qualified written request)

If you have ever had your own mortgage sold — and most homeowners have, since originating banks typically sell loans shortly after closing — you have probably received one of these letters.

The Hello Letter

The hello letter is sent by the new servicer within 30 days after the servicing transfer date. It introduces the new servicing company and provides the borrower with:

• The new servicer's name, address, and toll-free telephone number
• The date the new servicer began accepting payments
• A Truth in Lending Act (TILA) disclosure showing the current principal balance and the name of the new lender or note holder
• Information about where to send payments and how to contact the servicer

For note investors, the hello letter is often the first communication a borrower receives after a loan purchase. Many borrowers who have been non-performing for months or years — and may not have received any communication from their previous lender — will respond to this initial outreach.

RESPA Letter Timeline

The 60-day safe harbor period is an important borrower protection. During this window, a borrower cannot be charged a late fee if they mistakenly send their payment to the old servicer, as long as the payment arrives on time at the old address.

Why RESPA Letters Matter for Note Investors

RESPA letters are not just a compliance checkbox — they are a critical operational step in the note acquisition workflow and often the first touchpoint for borrower engagement.

Compliance Obligation

Failure to send proper transfer notices violates federal law. The CFPB (Consumer Financial Protection Bureau) enforces RESPA's servicing transfer provisions, and violations can result in statutory damages, actual damages, and attorney's fees. Even if the CFPB's organizational structure evolves, RESPA obligations remain statutory and fully enforceable.

Borrower Engagement Trigger

For non-performing loan investors, the hello letter is the opening move in the resolution process. A well-crafted hello letter — sent by your loan servicer as part of the loan boarding process — introduces you as the new note holder and provides a phone number or contact method that routes back to you or your team.

The typical post-acquisition workflow is:

1. Board the loan with your servicer and provide loan data and collateral documents
2. Servicer sends the hello letter with TILA disclosures to the borrower
3. Attorney sends a demand letter if the hello letter does not generate borrower contact
4. Borrower responds and you begin negotiating a resolution — loan modification, discounted payoff, short sale, or other workout

Qualified Written Requests Under RESPA

RESPA also establishes the borrower's right to submit a qualified written request (QWR) — a formal written inquiry about the servicing of their loan. When a servicer receives a QWR, they must:

• Acknowledge receipt within 5 business days
• Provide a substantive response within 30 business days (with a possible 15-day extension)

QWRs can request information about payment history, escrow balances, account status, or the identity of the current loan holder. Servicers who fail to respond appropriately face statutory penalties. As a note investor, your servicer handles QWR responses on your behalf — another reason professional, licensed servicing is essential.

Common Mistakes to Avoid

• Skipping the goodbye letter. If you are purchasing a loan from a seller who was also servicing it, ensure they send the goodbye letter before the transfer date. This obligation falls on the outgoing servicer, but as the buyer you should confirm it was completed.
• Delayed loan boarding. If you wait weeks or months to board a loan with your servicer, the hello letter is delayed, and you miss the window for initial borrower engagement while potentially violating RESPA's timing requirements.
• Self-servicing without compliance infrastructure. RESPA's transfer notice requirements, QWR response obligations, and disclosure rules are complex. Attempting to self-service loans without the systems to handle these obligations exposes you to legal risk that far exceeds the cost of professional servicing.