Why Does My Mortgage Keep Getting Sold and Should I Worry?

It could be shocking to open the mail and discover a notification informing you that your mortgage has been acquired by another lender. You invested a lot of time and effort into choosing a good lender initially, and now you have to send a substantial portion of money to an unknown financial institution. That being said, we often receive such inquiries from our clients at BrickWood Mortgage as a mortgage broker company in the Charleston, SC, area. However, there is nothing to worry about in such situations.

Allow us to help you understand this common occurrence in the housing loan market, why it happens, and how to react properly to this situation! 

The Basics of Mortgage Sale

As a rule, a lender does not always retain the loan for decades once the client signs the relevant papers. Financial institutions regularly sell their mortgages in order to earn some extra money, which they then use to cover their operational expenses or grant additional loans. 

Why does my mortgage keep getting sold? This is a common question among homeowners. These loans are often bought by government-sponsored enterprises like Fannie Mae or Freddie Mac in order to stabilize the housing market.

More often than not, loans are put together into packages called Mortgage Backed Securities and sold to interested parties. It is important to mention that mortgage servicing rights and the mortgage itself are two different things. While the mortgage owner possesses the right to reclaim the loan when necessary, the servicer collects the payments, controls the escrow account, and maintains its customer service. 

Why does my mortgage company keep changing? This is why.

What Does This Mean for the Borrower?

The main visible difference that can occur is a change of the mortgage servicer, often referred to as a mortgage service release. If you start dealing with a new company, you may need to establish an online account and send your checks to another address.

Everything that has been established earlier will stay as it was. Interest rates, principal and interest payments, and even the loan balance stay the same as per the agreement you signed during closing. Of course, you cannot simply change the conditions of the deal once you start working with a new servicer.

Our property tax and insurance costs may vary; however, you cannot change them regardless of who services your mortgage. In short, a mortgage change in servicers does not affect the fundamental terms of your loan agreement.

Rights of the Homeowner During a Transfer

As far as your rights are concerned, federal laws provide a set of legal provisions aimed at securing homeowners in such circumstances. In particular, you must be notified by your current servicer regarding the upcoming sale of your mortgage at least fifteen days prior to the effective date of the deal. You will receive a notification from your new servicer within fifteen days after the transfer. Also, we strongly recommend that you monitor the changes in the balance of your escrow account.

The letters will contain all details concerning the change of servicers, including the new name and address of the organization, as well as its toll-free phone number. Besides, the notification will include the information about the first day you should make your payments to the new servicer. There is also a sixty-day grace period when you cannot be penalized if you accidentally send a payment to the old servicer.

Navigating Through the Housing Loan Market

As you can see, a mortgage loan sold several times throughout the years is quite a common thing. Provided that you track your mailing box and pay your mortgage to the appropriate organization, everything will go smoothly. Our advice at BrickWood Mortgage is to save your letters from both organizations in case you need to verify the correctness of your payments. We are always ready to look through all the documents with you!