Mortgage companies often sell mortgage notes and servicing rights to other investors.Part of the closing documents you signed is a Servicing Disclosure. This should indicate what percentage of loans your lender sells off. This disclosure also states that no matter who ends up with your loan the terms can not change. This means your rate, payment, type of loan, payment date, prepayment terms, etc. can not be changed by the new lender.
Smaller lenders will frequently sell servicing rights to larger organizations as those larger companies can often service the loans more efficiently.
If you are notified by your bank to make payments to another bank, it simply means the "servicing right" of your mortgage has been transferred. While some banks service their mortgages, many mortgage holders do not. Fannie Mae and Freddie Mac, being the largest investors in the secondary market, do not service loans. Therefore, while your mortgage may have already been sold to Fannie Mae or Freddie Mac, you would never find yourself making a mortgage payment directly to Fannie Mae. Rather, you payment check is payable to the servicing company.
Mortgages are front packed with interest. In the beginning of your mortgage most of the payment goes towards the interest. Mortgage companies will often sell your mortgage to a different servicer for a portion of that interest. This clears the mortgage companies books, recovers the money they allowed you to borrow and gives them immediate profit. This is often done several times the first few years of your mortgage. The longer you hold the mortgage the less profit in interest there is and the less your mortgage gets sold.
This is a normal part of the mortgage business, and is one of the ways that banks and lenders are able to stay liquid, so they can maintain a bank roll large enough to continue to supply mortgage loans.
The larger the mortgage company, the lower the probability of your loan being sold. Smaller mortgage companies tend to be targets of mergers and acquisitions and therefore your loan has a higher risk of being purchased.
If your mortgage servicing company has changed, you will be notified via the mail.
Nothing from your original mortgage terms can change when your mortgage company sells or transfers your mortgage except who you write your checks out to each month. Selling and transferring mortgages is a very common practice and every lender has the right to sell or transfer your mortgage.
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