Virginia Hard Money Blog

Will my mortgage be sold and why?
When you refinance or secure purchase mortgage financing on your new home chances are it will be sold to different mortgage companies over time.
When the holder of your mortgage changes, so will the mailing address for your payments. Lenders are required to notify you of the change but don’t depend on them alone: any late payments will still be counted.

When you obtain a mortgage, your mortgage lender will have the right to sell or transfer your mortgage as they so choose. None of the original terms of the mortgage loan can change. The only thing that will be different is who you make your checks out to each month and where you send it. You will sign a servicing disclosure form at closing explaining the lenders guidelines on selling and transferring mortgages and how often they have done it on average, over the past 3 years.

Lenders will sell your mortgage for the loan amount plus a little extra. Then they take that money and provide a mortgage for another homeowner. Then they repeat the process again.

If your mortgage is transferred to another company, you should receive a written notification from both the old company and the new company. The transfer of the loan will not change the rate, balance of the loan, payment amount, payment date, or any other terms of the loan.

It is also important to verify that escrow payments are still accumulating. It is not unusual for the escrow payment to change slightly, but if your mortgage is being transferred within a couple months of the deadline for paying your annual or semi -annual real estate taxes, you should confirm with the lender that these will be paid ontime.

For a 60 day period following the transfer of your mortgage, the new servicer cannot report your payments sent to the former servicer as being late. This does not relieve you of the responsibility for the payments, but sending payments to the previous servicer is a frequent problem.

The fact that mortgages and their respective servicing can be sold allows for liquidity for mortgage bankers. Lenders can thus manage their loan portfolios and be more efficient. This efficiency leads to lower rates for the consumer. This is also why there are standardized documentation requirements for loans.

Moreover, its important to note that there are actually two parts to a mortgage — there’s the loan itself and then there’s the SERVICING of the loan — and both can either be sold together or separately.

The servicing company is who you make your payments to. They also handle any escrow accounts and send out late payment and delinquency notices as needed. They also handle foreclosures when necessary.

In fact, its this ability to continually create new business which facilitates the flow of loans and actually helps keep mortgage rates low.

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