Should You be Worried When Your Mortgage is Sold?

If you have taken out a mortgage, chances are you've received statements from companies other than your lender.  For some people this can be a little off-putting, but don't fret! Mortgages are regularly sold by lenders to investors like Freddie Mac, Fannie Mae, Hedge Fund companies, and the like.    Lenders do this as a way of generating the extra cash they need to be able to offer more loans.  On the investor’s side, purchasing mortgages is appealing because unlike many other investment opportunities, they are backed by a tangible asset - a house.  For the most part homes tends to increase in value, and if they don't, and the borrower defaults on the loan, the down payment is intended to cover the loss.  

While it may make you a little uncomfortable to think that your loan can change hands without your knowledge or consent, there is actually nothing to worry about.  When your loan is sold, its new owner has to adhere to the same terms and conditions that you agreed upon with the lender.  The Real Estate Settlement and Procedures Act, which is enforced by the CFPB, ensures that mortgages cannot be modified without the borrowers consent, even if they are sold to another company.

Also, the CFPB has laid out industry standards on how to collect on delinquent mortgages.  These standards are designed to protect the struggling borrower, and they apply even when a mortgage is sold.  They require the servicer to give the borrower options such as loan modification or a short sale before they pursue foreclosure.

So to sum things up - although your mortgage can be sold without your consent, it's terms and conditions cannot.  It may still seem a little bizarre, but there is no reason to be alarmed when you get a statement in the mail from a company with which you have never done business.