Ingrid B. Quinn

NMLS ID #211652 Arizona, Loan Consultant


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Your Home Loan Was Sold?

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recently experienced a situation with clients who were confused as to why their loan had been sold to a secondary lender. This has no reflection on the borrower. Selling a loan is typical in the mortgage industry. Mortgage brokers do not close loans in their own name. The funding lender’s name will be on the borrower’s closing documents. Mortgage bankers and banks close loans in their own name and typically retain the servicing (collection of monthly payments) of the loans while selling the loan on the secondary market.
A common reason for banks and lenders to sell their closed mortgages is to free up capital to do more loans. Lenders can only fund so many loans before they no longer have any funds on their warehouse line left to loan. This is where the secondary markets (the place that mortgages are bought and sold after they are closed) come in to play. When a lender funds a loan and then sells it to a secondary market investor (commonly Fannie Mae, Freddie Mac, Ginnie Mae or jumbo loan investors), they are able to make a profit as well as free up capital to originate new loans.
This system actually benefits borrowers by increasing demand in the mortgage market. If the process of selling loan did not exist it would force lenders to create a set amount of loans and they would have to wait for the loans to be paid off prior to creating new loans. The competitive part of the business would be reduced.
Borrowers have nothing to worry about if/when the loan is sold. The loan terms are set in your note and will not change. If you have a home loan and want to see what entity actually owns the loan, call your customer service department and ask. A servicing company is not generally the owner of your mortgage.
For questions or suggestions please feel free to contact me at Ingrid.Quinn@cobaltmortgage.com or visit me at http://www.CobaltMortgage.com/IngridQuinn or http://www.ScottsdaleMortgageExpert.com .