The occupancy period ends and the lender condition that mattered was never disclosed at origination

The commitment letter versus the note distinction is the right place to focus, and most borrowers never read the commitment letter at all after closing because the note is what gets recorded and what feels permanent.

The mechanism you are describing is real. Servicing transfers carry the original loan conditions into the new servicer's file, and the new servicer has no obligation to re-disclose conditions it inherited. The investor concentration restriction is the part that tends to surprise people most, because it is a pool-level condition, not a borrower-level one, and the borrower has no visibility into which pool their loan lands in after sale on the secondary market. You cannot control that, and you did not know to ask at origination.

The cure path before the next application is the part worth working through carefully. If the current servicer required written notice before conversion and you converted without providing it, you are dealing with a technical breach of a loan condition, not a legal violation of the note itself. Whether that matters depends on whether the servicer is willing to accept late notice and document it as cured, or whether they treat it as a default trigger. That determination is a legal question. Get a real estate attorney who works with mortgage documents to look at the commitment letter language before you write anything to the servicer, because how you document the cure is going to appear in the letter of explanation on your next application.

The next lender's underwriter will read the LOE carefully. A cured condition with documentation is a better file than an unexplained gap or a conversion with no servicer correspondence at all.

The assumption doing the most damage in the next deal is that the LOE is a formality. It is not. Underwriters use it to assess whether the pattern looks like intentional misrepresentation of occupancy intent at origination.

What does the commitment letter language actually say about notice, and has any written communication gone to the servicer since the conversion happened?

What servicer picked up your loan and did you check whether it ended up in a Fannie or Freddie pool, because that determines which concentration rules actually apply to you?

Confirm the current servicer has no written conversion restriction by requesting the complete servicing transfer notice, which must have been mailed within 15 days of transfer.