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Why was my mortgage sold on the secondary market?
Why was my mortgage sold to another mortgage company and what is the secondary market? When you use a mortgage broker, your mortgage is brokered to a lender that offers either subprime products or conforming products backed by Fannie Mae and Freddie Mac. The products depend on the investors behind the company. You can get an extremely competitive rate from the secondary market by using a mortgage broker. The secondary market is a network of large mortgage lenders that sell wholesale mortgage loans to mortgage brokers. The mortgage brokers deliver the low rates to the borrowers. The lender you close your loan with may service your loan for months on end before selling it to the secondary market. No matter what, the terms of your loan can not change. The only change possible is the lender that services your loan.
Lenders can can keep their liquidity by selling their loans on the Secondary Market. This gives brokers and mortgage bankers lower rates and costs to offer the consumer. Mortgage bankers and brokers are constantly looking for the best rates and products available on the secondary market to offer their clients.
You should receive a letter in the mail if your mortgage is to be sold. Make sure you make note of where the payment is to be sent if you do not receive a payment book. Failure to make your mortgage payment to the correct loan service company can result in late payments on your mortgage history and credit report.
Lenders sell their mortgages on the secondary market to free up money so that they have funds available to continue making new mortgage loans. If lenders ended up holding onto all of their loans, they would eventually run out of money to lend, or put themselves at too much risk by holding so many mortgages, and they would have to stop lending to new borrowers. However, by selling their mortgage loans on the secondary market, they are able to free up money and room to continue originating new loans for more borrowers.
It is very common for loans to be sold on the secondary market but there is no reason to be concerned about it. Lenders sell their loans on the secondary market to diversify their risk from interest rate changes.
Secondary markets reduce mortgage interest rates. They increase competition by encouraging the development of a new industry of loan originators.
If you don't receive your first payment coupon in the mail from your new lender, then it is a good possibility your loan was immedietely sold when you closed on the loan. This can cause frustration to a new homeowner because they dont know who there lender is. Make sure to call the servicing center at your old lender to find out where the loan was sold. Call up the new lender immedietely to give them all of your new information, and if need be, make your payment to them over the phone, to avoid any derogatory information on your credit report
» DISCLAIMER: The information contained in this article on 'Why was my mortgage sold on the secondary market?' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.
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