I am in the process of shopping for a new loan with a mortgage company with lender known to me for a long time. I am getting a good rate, but he tells that the loan is going to be sold to another reputable financial institution. Is that normal? I want to understand the deal. :?
That is a normal thing to happen. You should not get worried with it. The lender retains the right to sell a loan if required.
It should not affect your payment wherever it goes.
I had a similar thing happened to me. Initially, I was worried but later found that I got a better rate by going through my previous lender compared to the rate which I could get if I had gone directly to this lender.
I can understand the reason for you to be tense. I can assure you that this is a common thing today and is not going to trouble you. So, don't get panic.
Today most bank and mortgage companies sell mortgage in the secondary market. This process of selling the consumer mortgage to the secondary mortgage market helps in keeping the rates low.
Nowadays mortgages are sold nationally and internationally in the secondary mortgage market.
The sale consists of two parts - the sale of the mortgage loan and the sale of the mortgage serving of the loan. In the first part the new mortgage loan is sold to another lender in the secondary market soon after closing. For the second part the mortgage loan servicing is usually allowed to stay with the original loan provider but may be sold to other institutions.
If the loan servicing is sold then the intention behind the immediate sale has to be disclosed publicly and the percentage that has been sold. The mortgage loan holder should be informed 15 days prior to the sale of loan servicing.
You as a consumer should not be disturbed by the sale of your mortgage in the secondary market. In case you have a complaint, you can contact the BBB or the HUD under the National Affordable Housing Act.
As per the guidelines of the Federal Government, the company selling the loan must inform the borrower 15 days before the next payment due about the sale.
He must provide the name, address, phone no. and also the contact person to address any queries.
The new company has to provide the same information within the same time frame.
Thanks for the information. I am feeling relieved now. It's true I was nervous when I heard of it for the first time.
Page loaded in 0.468 seconds.