My Lender Sold My Mortgage

You have just found out that your mortgage has been sold or transferred to another lender.

Don't worry. This is a normal process and does not affect the terms and conditions of your original loan. Most mortgage banks exist to sell mortgages in the secondary mortgage market. Consumer mortgages benefit from this secondary mortgage market by helping to keep mortgage rates low and affordable.

This was not always so. Decades ago, consumers could go to their local bank , where their savings and other accounts were held, to borrow money for a house. These bonds (mortgages) matured after 20 or 30 years. Mortgage loans stayed local.

Today, mortgage loans are nationally and internationally sold on the secondary mortgage market, which helps fuel all facets of the American real estate market and economy in general.

After realizing that the lender sold my mortgage, you may ask yourself, "what is the procedure for informing me on the next mortgage sale and who does it?" But before answering this question, more details of the mortgage sale should be discussed.

The mortgage sale is actually comprised of potentially two sales: the mortgage loan and the mortgage serving of the loan. The new mortgage loan is sold to another lender on the secondary mortgage market soon after closing. The mortgage loan-servicing can be sold to another loan servicer but is usually not and stays with the original loan servicer.

For example, a newly written 8% mortgage loan contains two assets for sale: a mortgage loan at 7.75% and the mortgage loan-servicing at .25%. The most common practice is for the mortgage loan to be sold to another lender and the original mortgage writer retains the servicing asset.

If the original mortgage servicer intends to sell the servicing of the loan, the National Affordable Housing Act requires the original servicer to publicly disclose the intention of an immediate mortgage servicing sale, if the mortgage servicing can be sold at any time during the life of the mortgage loan, and the percentage of mortgage servicing that has been sold by the lender.

A mortgage loan-servicing disclosure statement must be given to a prospective mortgage holder at the time of the loan application. If by mail, the lender has 3 business days to send the prospective mortgage holder the disclosure statement after the completed loan application has been received.

The mortgage loan holder must be informed of his loan-servicing sale 15 days prior to the sale. Furthermore, the new loan servicer must inform the loan holder not more than 15 days after completion of the transfer. In the event of a loan-servicing concern or complaint, the consumer can contact the local Better Business Bureau or the Department of Housing and Urban Development (HUD) under the National Affordable Housing Act.

In summary, consumers should not be disturbed that their mortgages are being sold on the secondary mortgage market to other lenders and investors. Mortgage bankers are in business mainly to sell their mortgage loans on the secondary mortgage market. The secondary mortgage market is an integral part of the American real estate market and economy in general.

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NEW! - Rate This: 7.28/10 (53 votes cast)

Contributed By: Anonymous - 12/1/2005

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