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Has My Mortgage Been Sold?

By Elizabeth R. Elstien

It's a fact that mortgages get sold every day. Another mortgage company, bank or credit union, investor or any type of financial institution may purchase a borrower's commitment to repay a housing loan. Certain companies buy mortgages strictly as a money-making venture.

How does a buyer purchase a mortgage commitment? As an example, a mortgage company writes an 8 percent loan leaving it two assets to sell. One asset is a 7.75 percent loan and the second asset is a "servicing fee" to service the loan for 0.25 percent. This 0.25 percent fee is deducted from the borrower's interest payment. Both assets may be sold to the same or different buyers.

A general practice among larger mortgage companies is to retain the servicing asset and sell the loan. In this case, the borrower still sends their mortgage payment to the same entity, but now the original mortgage company is just servicing the loan commitment for the new lender.

Be prepared for your mortgage to be sold somewhere down the line, sometimes soon after you buy property. A mortgage may be sold several times until it is paid off. It's your right at closing to know if the mortgage or servicing company may change in the future. Your lender needs to inform you of this if they have any knowledge that this may happen.

The former mortgage holder or servicing company will alert you of the sale to another party or servicing agency, who will in turn notify you of the sale and who/where to send future payments. A statement will be issued from this new company and they will take care of all property insurance and tax payments just as the former company did (if that was the agreement). The terms of the home loan don't change.

This company change may not always go smoothly. Carefully check statements for errors. Be certain the property taxes and insurance get paid if these expenses were paid by the former company. If there is a dispute, keep making monthly mortgage payments to the new company and document all conversations with a follow-up letter.

Beware of scams requesting that you send your mortgage payments to a new address. Both the old and new companies should issue letters stating the change. If you are still unsure, contact the company you have been sending payments to so they can verify the change of information.

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About The Author

Elizabeth R. Elstien has worked in real estate for over 15 years as a real estate...

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