Borrower Notification Letter After Selling Your Texas Note

To sell a promissory note in Texas, you submit your note details to a direct buyer, receive a cash offer (typically within 24 hours), complete a due diligence process, and close in as little as two to four weeks with funds wired directly to your account. There are no broker fees when you sell directly, and the borrower's loan terms remain completely unchanged throughout the transaction. Longhorn Note Buyers in San Antonio, a direct buyer with over four decades of experience and more than $47 million in Texas notes purchased, offers free valuations within 24 hours and closes with no broker commissions.

This guide walks you through the full process of selling a promissory note in Texas in 2026, from understanding what your note is worth to receiving your funds at closing.

The Borrower Notification Letter and Why It Matters

When you sell a promissory note secured by Texas real estate, one of the most important steps in the process is notifying the borrower that the note has changed hands. This notification is not optional. Federal and state laws require that the borrower be informed of the transfer, including who now owns the note, where future payments should be sent, and who to contact with questions about the account. The borrower notification letter is the formal document that accomplishes this, and getting it right is essential for a smooth transition that protects everyone involved, including you as the seller, the buyer, and the borrower.

At Longhorn Note Buyers, we have been purchasing promissory notes in Texas since 1983. Over 42 years and more than $47 million in note purchases, founder Nick McFadin and co-founder Sandy McFadin have handled thousands of borrower notifications as part of our standard closing process. We hold an A+ rating with the Better Business Bureau and maintain a 100 percent close rate on all quoted offers. As a direct buyer using our own capital, we manage every aspect of the transaction in-house, including the preparation and delivery of the borrower notification letter. This guide explains what the letter must include, who is responsible for sending it, and how the process works under Texas and federal law.

Legal Requirements for Borrower Notification

Federal Requirements Under RESPA

The Real Estate Settlement Procedures Act, commonly known as RESPA, establishes federal requirements for notifying borrowers when a loan secured by real property is transferred. Under RESPA and its implementing regulation, Regulation X, both the transferor (the seller of the note) and the transferee (the buyer of the note) are required to provide written notice to the borrower when the servicing of a loan is transferred. The transferor must send the notice at least 15 days before the effective date of the transfer, and the transferee must send its notice no later than 15 days after the effective date. In practice, these two notices are often combined into a single joint notification that is sent at or around the time of closing.

It is important to understand that RESPA applies specifically to "federally related mortgage loans," which includes most loans secured by residential real property. For notes secured by raw land or commercial property, RESPA may not apply directly, but best practices and Texas state law still require borrower notification. Even when RESPA does not technically mandate notification, providing a clear and professional notification letter is essential to avoid payment disruptions and potential legal disputes. Longhorn Note Buyers sends a borrower notification on every transaction regardless of the property type, because it is the right thing to do and it ensures a clean transition for all parties.

Texas State Law Considerations

Texas law works alongside federal regulations to govern the transfer of promissory notes and the notification of borrowers. The assignment and transfer of a note and deed of trust in Texas must be properly documented and, in many cases, recorded with the county clerk. While Texas law does not specify a separate borrower notification requirement beyond what RESPA already mandates for covered loans, the Texas Property Code and the terms of most deeds of trust include provisions that relate to the transfer process and borrower rights.

For contracts for deed, the notification requirements can be different and are governed by Chapter 5 of the Texas Property Code. Contracts for deed have specific disclosure and recording requirements in Texas that go beyond what applies to traditional deed of trust transactions. If you are selling a contract for deed rather than a traditional promissory note, the notification process may involve additional steps and documentation. Longhorn Note Buyers is familiar with both structures and handles the notification requirements appropriately for each type of instrument.

Timing Requirements

The timing of the borrower notification is critical for compliance and for ensuring that the borrower knows where to send payments without interruption. Under RESPA, the transferor's notice must be sent at least 15 days before the effective date of the servicing transfer. The transferee's notice must be sent within 15 days after the effective date. There is a 60-day safe harbor period during which a borrower cannot be charged a late fee or reported as delinquent for sending payment to the old servicer, provided the payment was received by the old servicer before the 60-day period expired.

This 60-day grace period exists to protect borrowers who may not immediately receive or act upon the notification letter. During this period, any payment sent to the previous servicer or note holder must be forwarded to the new servicer or note owner. At Longhorn Note Buyers, we coordinate with the seller to ensure that any payments received during the transition period are properly handled and that the borrower is not penalized for any confusion during the changeover. Our experience with the day-by-day process of a note sale means we know exactly how to time the notification to minimize disruption.

What the Borrower Notification Letter Must Include

Identification of the Parties

The notification letter must clearly identify the parties involved in the transfer. This includes the name and contact information of the current note holder or servicer (the transferor), the name and contact information of the new note owner or servicer (the transferee), and enough identifying information for the borrower to connect the letter to their specific loan. This typically includes the borrower's name, the property address, and the loan or account number if one exists. The letter should be written in clear, straightforward language so the borrower can easily understand who is sending the letter, why it is being sent, and what action, if any, the borrower needs to take.

For many owner-financed notes in Texas, particularly those created in private transactions between individuals, there may not be a formal account number. In those cases, the letter identifies the loan by referencing the original promissory note date, the property address, and the recording information for the deed of trust. This provides the borrower with enough information to confirm that the letter relates to their specific obligation. Longhorn Note Buyers prepares each notification letter with the specific details of each transaction, ensuring there is no ambiguity about which note is being transferred.

New Payment Instructions

Perhaps the most important piece of information in the notification letter is where the borrower should send future payments. The letter must include the new payment address, the name of the entity or individual to whom payments should be made, and any new payment methods available to the borrower, such as online payment portals, ACH transfers, or payment by mail. The effective date from which payments should be sent to the new address must be clearly stated so the borrower knows exactly when to switch.

If the new note owner is using a third-party servicer, the payment instructions will direct the borrower to the servicer rather than to the note owner directly. The letter should make it clear that the servicer is acting on behalf of the new note owner and that payments made to the servicer satisfy the borrower's obligation under the note. The borrower's monthly payment amount, interest rate, and remaining terms do not change as a result of the note sale. The only change is where the payment is sent and who manages the account going forward. This is one of the key points that addresses borrower concerns about what happens when a note is sold.

Effective Date of the Transfer

The notification letter must state the effective date of the transfer, which is the date on or after which the borrower should begin sending payments to the new servicer or note owner. This date should be coordinated with the closing of the note sale to ensure there is no gap or overlap in payment responsibility. Payments received by the old note holder before the effective date belong to the seller, while payments received on or after the effective date belong to the buyer. The letter should make this clear so the borrower understands exactly when the changeover occurs.

At Longhorn Note Buyers, we work with the seller to choose an effective date that aligns with the borrower's regular payment cycle. For example, if the borrower makes payments on the first of each month, we try to set the effective date at the beginning of a month so the borrower can simply start sending their next regular payment to the new address. This minimizes confusion and reduces the likelihood of a payment being sent to the wrong address during the transition. The payment process for the seller is also coordinated with this timeline to ensure a clean break.

Contact Information for Questions

The notification letter should provide the borrower with contact information for both the old and new note holders or servicers during the transition period. The borrower may have questions about the transfer, may want to verify the legitimacy of the letter, or may need help setting up payments with the new servicer. Providing clear contact information, including phone numbers, email addresses, and mailing addresses, makes it easy for the borrower to get answers and reduces the risk of payment disruptions caused by uncertainty or confusion.

During the transition period, the borrower should be able to reach someone who can answer their questions promptly and professionally. At Longhorn Note Buyers, we provide our contact information directly in the notification letter and make ourselves available to answer any questions the borrower might have. If the borrower is accustomed to dealing directly with the seller and has concerns about the change, we understand that sensitivity and handle the transition with professionalism and respect for the borrower's concerns. The borrower's rights under the note are fully preserved regardless of the transfer, and we make sure they understand that.

Statement of Borrower Rights

Under RESPA, the notification letter must include a statement informing the borrower that the transfer does not affect the terms of their note and that they have certain protections during the transition period. Specifically, the letter should state that the borrower cannot be charged a late fee during the 60-day period following the transfer for payments sent to the previous servicer, provided those payments were received on time. The letter should also inform the borrower of their right to be free from adverse credit reporting during the transition period for the same reason.

These borrower protections exist to ensure that the transfer of a note does not harm the person making the payments. The borrower did not choose to have their note sold, and they should not suffer any negative consequences because of it. At Longhorn Note Buyers, we take these protections seriously and ensure our notification letters include all required disclosures. Our goal is a seamless transition that the borrower barely notices, aside from updating the address on their payment. This approach reflects our commitment to conducting every transaction with integrity, which is part of why we have maintained an A+ BBB rating and a 100 percent close rate over more than four decades.

Who Sends the Borrower Notification Letter

Responsibilities of the Seller

Under RESPA, the transferor, meaning you as the seller of the note, is responsible for providing written notice to the borrower at least 15 days before the effective date of the servicing transfer. This notice informs the borrower that the servicing of their loan is being transferred, provides the effective date, and includes the contact information for the new servicer. If you are working with a professional servicer, the servicer may send this notice on your behalf. If you are self-servicing, the responsibility falls on you personally.

In practice, when you sell your note to Longhorn Note Buyers, we work with you to coordinate the notification process so that both parties' obligations are met. We can prepare the notification letter for your review and approval, or we can provide you with guidance on what the letter needs to include if you prefer to prepare it yourself. Either way, we make sure the letter goes out on time and includes all the required information. This coordination is part of our standard closing process, and we handle it at no additional cost to the seller. The documentation requirements for a note sale include the notification letter, and we ensure nothing is overlooked.

Responsibilities of the Buyer

The transferee, meaning the buyer of the note, is also required to send notification to the borrower under RESPA. The buyer's notice must be sent within 15 days of the effective date of the transfer and must include the buyer's or new servicer's name, address, and contact information, along with the date the new servicer will begin accepting payments. As noted above, the transferor's and transferee's notices can be combined into a single joint notice, which simplifies the process and reduces the number of communications the borrower receives.

Longhorn Note Buyers takes responsibility for preparing and sending the buyer's notification as part of every transaction. We do not leave this to the seller and we do not leave it to chance. Our team prepares the letter, coordinates the timing with the closing, and sends it to the borrower with the information they need to continue making payments without interruption. This is one of the many legal responsibilities that transfer to the buyer after a note sale, and we handle it professionally and promptly every time.

Joint Notification Letters

The most efficient approach, and the one Longhorn Note Buyers typically uses, is a joint notification letter that satisfies both the transferor's and the transferee's obligations in a single document. This joint letter is signed by both parties and includes all the information required under RESPA, including the identity of both the old and new servicers, the effective date of the transfer, the new payment address, and the borrower's rights during the transition period. The joint letter reduces confusion for the borrower by providing all the relevant information in one place rather than requiring them to piece together information from two separate letters.

The joint notification approach also simplifies the timing requirements because both parties' obligations are met simultaneously. Instead of coordinating separate mailings with different deadlines, a single letter is sent at or around the time of closing, satisfying the notification requirements for both the seller and the buyer. Longhorn Note Buyers has used this approach successfully in thousands of transactions, and our borrowers consistently receive clear, professional notification that makes the transition smooth and straightforward.

What Happens If the Borrower Is Not Notified

Legal Consequences

Failing to properly notify the borrower of a note transfer can create significant legal complications. If the borrower continues sending payments to the previous note holder because they were not informed of the change, the new note owner may not receive payments they are entitled to. The previous note holder has a legal obligation to forward those payments to the new owner, but sorting out misdirected payments creates unnecessary delays, potential disputes, and administrative headaches for all parties involved.

More seriously, if a dispute arises and the borrower can show that they were not properly notified of the transfer, the new note owner's ability to enforce the note against the borrower may be compromised. The borrower could argue that they made payments in good faith to the party they believed held the note, and that they should not be penalized for the failure of the transferor and transferee to comply with notification requirements. Courts may be sympathetic to this argument, particularly if the borrower can demonstrate that they acted reasonably based on the information available to them. This is one reason why proper notification is not just a regulatory box to check but a substantive step that protects the enforceability of the note.

Financial Consequences

Beyond the legal issues, failing to notify the borrower can have practical financial consequences. If the borrower does not know where to send payments, payments may stop entirely, creating a false delinquency that could take time to resolve. The new note owner may incur costs trying to locate the borrower, redirect payments, and bring the account current. If the situation is not resolved promptly, it could even lead to unnecessary foreclosure proceedings based on a delinquency that was caused by the notification failure rather than by any fault of the borrower.

These financial risks are entirely avoidable with a properly prepared and timely borrower notification letter. At Longhorn Note Buyers, we consider the notification letter to be one of the most important documents in the closing package, not because it is complicated, but because getting it wrong can cause problems that are disproportionate to the simplicity of the task. Our experience ensures that every notification is accurate, timely, and compliant with all applicable requirements.

The Borrower's Perspective

Common Borrower Concerns

Receiving a notification that your loan has been sold to a new company can be unsettling for a borrower, especially one who has been making payments to the same person for years and may have a personal relationship with the note holder. Common concerns include whether the terms of the loan will change, whether the new owner will be as flexible or accommodating as the previous one, and whether the sale is legitimate or a scam. These concerns are natural and understandable, and the notification letter should address them directly and clearly.

The most important thing for a borrower to understand is that the sale of a note does not change the terms of their obligation. The payment amount stays the same, the interest rate stays the same, and the remaining term stays the same. The borrower's rights under the note and deed of trust are fully preserved, and any provisions for late fees, grace periods, or prepayment are unchanged. The new note owner steps into the shoes of the previous owner and is bound by the same terms. When a borrower asks whether they have to approve the sale, the answer is generally no, because most promissory notes and deeds of trust include provisions that allow the note holder to transfer the instrument without the borrower's consent.

Verifying the Legitimacy of the Notification

In an era of financial scams and identity theft, borrowers are right to be cautious about any letter directing them to send money to a new address. The notification letter should include enough detail about the existing loan, including the property address, the original note date, and the current balance, for the borrower to confirm that the letter relates to their actual obligation. The letter should also include contact information for both the old and new note holders so the borrower can independently verify the transfer.

If you are the seller and you have a relationship with the borrower, it can be helpful to give the borrower a courtesy call or letter before the formal notification arrives, letting them know that you have sold the note and that they will be receiving official notification from the new owner. This personal touch can go a long way toward easing the borrower's concerns and ensuring a smooth transition. At Longhorn Note Buyers, we welcome this kind of cooperation between sellers and borrowers and are happy to coordinate our notification process with any personal communication the seller wishes to make.

How Longhorn Note Buyers Handles the Notification Process

Our Standard Procedure

At Longhorn Note Buyers, the borrower notification is a standard part of every closing. We prepare the notification letter, coordinate the timing with the seller, and ensure it is sent to the borrower with all required information. Our letters are prepared in compliance with RESPA and Texas law, and they include clear payment instructions, contact information, the effective date of the transfer, and a statement of the borrower's rights during the transition period. We handle this process for every note we purchase, whether it is a note in San Antonio, a note in Houston, a note in Dallas, or a note anywhere else in Texas.

Our process also includes coordination with any existing third-party servicer to ensure a smooth handoff of servicing records. We obtain the complete payment history from the outgoing servicer, confirm the current balance, and set up the account with our servicer so there is no gap in service. The borrower receives their notification, starts sending payments to the new address, and the transition is complete. For the seller, this means you do not have to worry about the notification process at all. It is one of the many details we handle as part of our commitment to making the note selling experience as simple and stress-free as possible.

Working with Self-Serviced Notes

If you have been collecting payments yourself rather than using a professional servicer, the notification process is slightly different but no less important. In a self-serviced situation, you are the current servicer, and the notification letter informs the borrower that servicing is being transferred from you to the new owner or their designated servicer. We work with you to gather the necessary information about the borrower's account, including the current balance, last payment received, and any escrow amounts, to ensure the notification letter is accurate and complete.

Self-serviced notes sometimes involve informal payment arrangements that need to be formalized during the transition. For example, if the borrower has been making cash payments or has an informal arrangement for the payment date, these details need to be addressed in the notification so the borrower understands the expectations going forward. Longhorn Note Buyers has extensive experience with notes that have informal payment records, and we know how to handle the transition in a way that is fair to the borrower while protecting the interests of all parties. Our we close what we quote guarantee extends to every aspect of the transaction, including the notification process.

Notification for Different Types of Texas Notes

Deed of Trust Notes

The standard deed of trust note in Texas is the most common type of instrument we purchase, and the notification process for these notes follows the RESPA framework described throughout this guide. The notification letter references the promissory note, the deed of trust, and the property securing the obligation. The assignment of the deed of trust is recorded with the county clerk as part of the closing process, and the notification letter informs the borrower that the note and deed of trust have been assigned to the new owner.

Contract for Deed Instruments

Contracts for deed, also known as executory contracts in Texas, have additional requirements under the Texas Property Code. The transfer of a contract for deed involves additional documentation and recording requirements beyond what applies to a standard deed of trust transaction. The notification to the buyer under a contract for deed must comply with the specific provisions of Chapter 5, which may include additional disclosures about the buyer's rights and the seller's obligations. Longhorn Note Buyers understands these additional requirements and ensures that the notification process for contract for deed instruments fully complies with Texas law.

Partial Note Purchases

If you are selling a partial interest in your note rather than the entire note, the notification process may need to address the fact that multiple parties now have an interest in the borrower's payments. The notification letter in a partial sale scenario explains how payments will be allocated between the parties and directs the borrower to send payments to the entity responsible for managing the account going forward. Partial sales add a layer of complexity to the notification process, but with proper documentation and clear communication, they can be handled smoothly.

Why Longhorn Note Buyers

Longhorn Note Buyers has earned its reputation as one of the most trusted note buyers in Texas through 42 years of consistent, reliable service. With more than $47 million in notes purchased, an A+ BBB rating, and a 100 percent close rate, we handle every detail of the note buying process with professionalism and care, including the borrower notification that is essential for a smooth transition. Founded by Nick McFadin in 1983 and co-founded by Sandy McFadin in 2013, we are a direct buyer that uses our own capital. We do not charge broker fees or commissions, and we stand behind our we close what we quote guarantee on every transaction. When you sell your note to Longhorn, you can trust that the borrower notification and every other aspect of the closing will be handled correctly and professionally.

Get Your Cash Offer Today

Ready to sell your Texas promissory note and let us handle all the details, including the borrower notification process? Call Longhorn Note Buyers at (210) 828-3573 or email sandy@longhornnotebuyers.com. We will provide a firm, no-obligation cash offer within 24 hours. Let our 42 years of experience work for you!

Frequently Asked Questions

Is the borrower notification letter legally required when selling a note in Texas?

Yes. Under RESPA, both the transferor and the transferee are required to notify the borrower when the servicing of a federally related mortgage loan is transferred. Even for notes that may not fall under RESPA, such as those secured by raw land or commercial property, Texas best practices and sound business judgment require notifying the borrower of the transfer. Longhorn Note Buyers sends a borrower notification letter on every transaction regardless of the property type to ensure a clean transition and protect all parties involved.

Does the borrower have to approve the sale of the note?

In most cases, no. The typical promissory note and deed of trust in Texas include provisions that allow the note holder to transfer the instrument without the borrower's consent. The borrower's obligation under the note remains the same regardless of who holds it. However, the borrower must be notified of the transfer so they know where to send future payments. Some note holders choose to inform the borrower personally before the formal notification letter is sent, which can help ease any concerns, but borrower approval is not typically required for the sale to proceed.

What if the borrower ignores the notification and keeps paying the old note holder?

Under RESPA, the borrower is protected for 60 days after the effective date of the transfer. During this period, payments sent to the previous note holder in good faith must be forwarded to the new owner, and the borrower cannot be charged late fees or reported as delinquent. After the 60-day period, the borrower is responsible for sending payments to the new owner or servicer as directed in the notification letter. If the borrower continues sending payments to the wrong address after the grace period, the new note owner may need to contact the borrower directly to redirect payments.

Who pays for preparing and sending the notification letter?

At Longhorn Note Buyers, we handle the preparation and delivery of the borrower notification letter at no cost to the seller. This is part of our standard closing process. There are no hidden fees or charges for this service. We prepare the letter, coordinate the timing with the closing, and ensure it reaches the borrower with all required information. The cost of our closing process is built into the economics of the transaction, not passed on to the seller as a separate charge.

Can I notify the borrower myself before Longhorn sends the official letter?

Absolutely. Many sellers who have a personal relationship with their borrower choose to give them a courtesy call or informal notice before the official notification letter arrives. This can help the borrower feel more comfortable with the transition and reduce any anxiety about receiving a formal letter from an unfamiliar company. Longhorn Note Buyers is happy to coordinate with you on the timing and content of any personal communication you want to make. We find that this cooperative approach leads to the smoothest transitions for everyone involved.