When is a Notice of Transfer of Mortgage Loan required?

A Notice of Transfer of Mortgage Loan is required when the legal title of the loan is sold. This notice is a vital component of the Truth in Lending Act because it ensures that borrowers are informed when their loan is sold to a new entity. This notification is crucial for borrowers to understand who they will be making payments to and who holds their mortgage.

By providing this notice, the lender maintains transparency in the lending process, allowing the borrower to know the party responsible for holding the loan. This enhances consumer protection as it prevents confusion that could arise when servicing transfers occur without proper notification.

The other options involve circumstances that do not necessitate a Notice of Transfer. Selling servicing rights pertains to the management of the loan, not its ownership, and therefore does not trigger the notice requirement. Refinancing is a separate transaction that involves creating a new loan rather than transferring an existing one.