Why mortgages are sold

On the other hand, mortgage servicers are the ones who handle your mortgage payments and escrow accounts. Some originators are also servicers, while others are not. Outside investors, either based in the U. Below is an example breakdown of the process. The secondary market also helps support a stronger, more resilient primary housing market on the whole. Reselling mortgages frees up money for new mortgage originations and lowers interest rates. Congressionally created mortgage funders and repackagers, like Fannie Mae and Freddie Mac , are among the most common purchasers in the secondary marketplace, though other investors exist, too.

Lenders are legally required to notify you of your loan sale before it happens. You should get a notice in the mail at least 15 days prior to the official transfer. Your loan may be owned and serviced by the same company, or two different companies. The new servicer of your loan must also send notification within 15 days of the sale. As a homeowner, it can be frustrating to find out that your mortgage has been sold.

The servicer may only change servicing-related details, such as where you send your payments, your payment date, and in certain situations, the way that escrow is calculated. The new servicer may conduct an escrow account analysis to understand the balance within the account and determine a surplus, shortage, or deficiency.

If the servicer determines any such balance, or if escrow terms or accounting formulas change, the servicer must provide you with your first escrow document within 60 days of the transfer. All other loan terms will remain the same. Financial investors and mortgage lenders engage in the transfer of ownership of mortgage loans from one to multiple times within a mortgage lifespan. You have to get a letter of transfer in time, 15 days before the sale is done, and get a letter of notice from your new servicer with contact information of where to send your mortgage payment usually within 30 days after your mortgage is sold.

Usually, you have a 60 day grace period to make payments after you get the notice from your new service. The transfer process is often seamless and may not involve you directly, you are not affected financially, neither is your home after your mortgage is sold.

Even after this change, your loan terms such as interest rate, mortgage rates, monthly payment rates must not change. Your notice letter must provide information on your new servicer, and every other detail you need to know about the sale.

Since selling mortgages is not affecting anybody negatively, your mortgage is likely going to get sold to another servicer. About 50 per cent to 80 per cent of real estate mortgages are sold a lot of time before they are fully paid. Lenders will sell your mortgage because they need money paid from the upfront payment made by the buyer, rather than continue to wait for you to make payments, to fund successful loan applications from other prospective home mortgage buyers which will keep growing in number.

Selling mortgages helps to keep interested in mortgage rates competitive, control the real estate market at no expense to the homeowner. What happens when my mortgage is sold? Erik J. Martin The Mortgage Reports contributor. June 29, - 6 min read. When a mortgage company sells your loan Lenders and investors buy and sell mortgages all the time, usually without any problems. Verify your new rate Oct 25th, What happens when my mortgage is sold?

Related: Avoiding mortgage sale scams Knowing why and how this occurs can calm your fears. Why lenders sell or transfer mortgages Keith Baker , Mortgage Banking Program coordinator and faculty at North Lake College, says around seven of 10 mortgage loans change hands. He adds that, when a mortgage loan closes and funds, the lender has four choices: Keep the mortgage in its loan portfolio Transfer the servicing to another servicer Sell the loan to another company or investor Both transfer servicing and sell the loan Buyers of the loan on the secondary market can include Freddie Mac, Fannie Mae and Ginnie Mae.

A transfer or sale of your mortgage loan should not affect you. What to do if you have a new servicer Say your loan is sold but the servicer stays the same. One will come from your current servicer. The other will come from your new servicer. Review your servicing transfer notice carefully. You should also consult an attorney.

As long as you have been notified in a timely manner, your new servicer accurately lists your information, and you send in payments to the right address you should have nothing to worry about. Advertiser Disclosure: Many of the offers appearing on this site are from advertisers from which this website receives compensation for being listed here.

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These offers do not represent all account options and credit cards available. Credit score ranges are provided as guidelines only and approval is not guaranteed. Hearing that your mortgage has been sold can be stressful, but don't worry too much. Lenders sell mortgages all the time. By Daryl Paranada. Continue Reading. Compare Best Accounts Now. About the author Daryl Paranada. Daryl is a staff writer at MyBankTracker. In the letter they state that as of Nov 1 less than 15 days notice, BTW I will no longer be able to access any mortgage paperwork at all, so "download it now if you need it".