Purchasing a new home is an exciting adventure. One of the many steps you need to take is selecting a home mortgage lender. You may put a lot of time and work into selecting a lender you feel offers everything you need. But, then, a few months after you close the deal, the lender sells your loan to another company. Why did it happen? What does it mean to you?
It’s quite common for mortgage companies and banks to sell mortgages and federal laws allow this to happen. Lenders can sell the mortgage or transfer servicing rights to other banks and it does not require the consumer to consent to the process. In the eyes of your ender, your mortgage is a financial asset and investment. They may decide to sell it when they feel they can profit by doing so. Lenders sell mortgages because:
They want to open up capital they have so they can lend more money to other borrowers. They will make money offer the sale due to the fees paid at the time the loan is originated
In most situations, a loan that’s sold from one company to the next creates no difference for the homeowner. If you are behind on your loan payments, though, it may impact the actions the bank takes against you. You do have the right to gain notice of this type of transaction at least 30 days prior to it. If you hope to avoid such transactions from occurring, ensure it is stated as such in your mortgage contract.