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Why did my mortgage company sell my mortgage?
You spent a lot of time researching mortgages and buying a home only to get a letter from your mortgage company informing you that your mortgage has been sold. You’re understandably confused. How did this happen, and what’s the point? Why go to all the trouble of choosing a mortgage company if it is just going to sell your mortgage to another?
While a mortgage company selling your mortgage to another is a common practice, there are a few things to know about the process.
Your mortgage being sold is business as usual
Many lenders specialize in originating loans and soon sell them to another company to manage the loan servicing portion. While this allows smaller companies to focus on their niche, SmartMortgage has the benefit of being part of Guild Mortgage, which services the majority of its loans in-house. This allows us to keep a closer eye on your potential refinance opportunities, and refer these options to you when we see them. It also means that your loan officer is more invested in making sure you have a loan you’re happy with, because we will maintain the relationship with you through the life of your loan.
Depending on the loan program, you may still receive a notice that your loan has been transferred. For example, Fannie Mae will send their own welcome letter that reads very much like your loan has been sold, but Guild will still handle the customer service. However, there are some cases where the best loan program we can provide for your situation is serviced by another company.
In your contract, it is mandatory to state that your mortgage can be sold at any time. Make sure to read your contract carefully and don’t be surprised when it happens. Your mortgage company is also required to provide you with a notice of a loan ownership transfer.
The consumer should not take the fall should something happen during the transfer process. If paperwork is lost during the transfer, or you were never notified that you must now pay another provider, know your rights and legal options. You can file a complaint with the Bureau of Consumer Financial Protection and consult an attorney. If you send your payment to your old lender by mistake, the Real Estate Settlement Procedures Act (RESPA) will protect you from any penalties during a 60 day grace period after your mortgage is sold.
Unless your loan is delinquent or you are behind on your payments, the terms you agreed upon when buying the mortgage will not change once another company purchases it.
Mortgage companies sell mortgages to free up capital
A reason your mortgage has been sold is to free up capital and allow the originating lender to provide money to other borrowers who qualify. Freeing up capital also allows the company to invest in other opportunities. This strategy also helps reduce their risk exposure and prevents asset-liability mismatch.
At SmartMortgage, we have the benefit of a local personalized lender backed by the strong customer service support of a national company. This pairing for mortgage origination and servicing ensures that you will know who to reach out to throughout the life of your loan. We are dedicated to providing you with the most up-to-date information about your mortgage, today, tomorrow and 10 years from now. We stand ready to help you find the best mortgage for your needs and answer any questions about your current mortgage as things change.