Have you ever taken out a loan from a mortgage company or bank only to find out a few months down the road that it’s been sold? Don’t be surprised if this happens to you — multiple times — because it’s common that lenders sell mortgages.
Federal banking laws allow financial institutions to sell mortgages or transfer the servicing rights to other institutions. Consumer consent is not required when lenders sell mortgages. It might seem alarming because a mortgage is something very personal to a consumer, a symbol of your home ownership. But banks and other financial institutions view your mortgage differently. To them, your mortgage is just another financial asset. And that means lenders handle your home loan much more differently than you might.
Questions might be swirling around in your head. Why is your servicer allowed to do this? What does it mean for you? Are the terms of your mortgage going to change? Don’t panic if you discover that your mortgage now belongs to another institution. Remember: a loan is a loan no matter who owns it. Your interest rate, payment amount, type of loan (fixed rate or ARM), etc. cannot change just because your loan has been sold. The only thing that’s changing is the address you’re sending your payments to.
To help put your mind at ease, here are answers to all of the questions you might have about your lender selling your mortgage:
Why do lenders sell mortgages? There are basically two main reasons why a lender might sell your mortgage. Continue reading