4 ms·

Yes, every loan I've received, even re-fis was sold within months to the final lender.

by iancmceachern 4y ago

indigodaddy 4y ago
Often not even the final lender. One of mine changed hands 2-3 times (can’t remember) within a year or two.
- avrionov 4y ago
  Do you have to send money to a different company when the mortgage is sold?
  - lbotos 4y ago
    Yep! I've had two mortgage servicers in the first year of owning a home. The first offered bi-weekly payments, the second didn't. So you aren't even guaranteed the same "features".
  - indigodaddy 4y ago
    Yes for us and is a small hassle each time to re-set that up..
  - lotsofpulp 4y ago
    Sometimes.
- twic 4y ago
  This feature of the US mortgage system seems wild to me, as a Brit. When i take out a mortgage with a lender, i continue to owe money to that lender, and only that lender, until i repay it. If the lender wants that risk off their books, they can (and do!) sell mortgage-backed securities, which carry away the financial risk of the mortgage, whilst leaving their contract with me intact. It seems very strange, and terrible for borrowers, that you can form a contract with one entity, and then have it transferred to another without your agreement. From what i've heard, those transfers aren't purely formalities either, people get hit with weird charges sometimes.
  - wonderwonder 4y ago
    Even nicer is often if the borrower defaults that loan is sold to aggressive debt collectors for pennies on the dollar. Those debt collectors now hound you and litigate against you to get as much from you as they can. This is rampant with cc debt.
  - linuxftw 4y ago
    > mortgage-backed securities This describes the US system as well. The 'servicing' (who you pay each month) of the loan might change hands, but the underlying debt was bundled and sold off already. In the US, many banks don't service loans. I assume, that "Fund X" buys the securities using funds from 401ks, etc, and they kick the servicing to a preferred partner. The partner gets paid some cut. The fund gets the yield, the fees are paid out to to the servicing entity. This is why the 2008 event was so disruptive. Mortgage brokers were labeling everything as AAA, and the funds were buying them up. Banks weren't risking their own capital, they want the 401k holders to own the debt, and they just take their cut. It's a nice racket, can't figure out how to break in, though.
  - dymk 4y ago
    I don't see how it's weird. You do agree that the debt can be sold to somebody else. And it's not like anything actually changes, other than the payment portal you use. It's an incredibly tightly regulated system, and the buyer of the debt is still subject to the exact same contractual obligations that the originator had.
    - iancmceachern 4y ago
      It's not that I think it's weird because I think something shady is going on. I think it's weird because where does this process add value? I argue it doesn't. In my experience, things like this, financial instruments, the people that sell them and make a living in the churn only make their money when there is a transaction. The more transactions, the more fees and etc. they can charge. They make money when money changes hands, not necessarily by making something of value.
      - 4y ago
- lsaferite 4y ago
  Mine has just been resold back to the original lender as far as I can tell. Very weird.

Yes, every loan I've received, even re-fis was sold within months to the final lender.

indigodaddy 4y ago

Often not even the final lender. One of mine changed hands 2-3 times (can’t remember) within a year or two.

avrionov 4y ago
Do you have to send money to a different company when the mortgage is sold?
- lbotos 4y ago
  Yep! I've had two mortgage servicers in the first year of owning a home. The first offered bi-weekly payments, the second didn't. So you aren't even guaranteed the same "features".
- indigodaddy 4y ago
  Yes for us and is a small hassle each time to re-set that up..
- lotsofpulp 4y ago
  Sometimes.
twic 4y ago
This feature of the US mortgage system seems wild to me, as a Brit. When i take out a mortgage with a lender, i continue to owe money to that lender, and only that lender, until i repay it. If the lender wants that risk off their books, they can (and do!) sell mortgage-backed securities, which carry away the financial risk of the mortgage, whilst leaving their contract with me intact. It seems very strange, and terrible for borrowers, that you can form a contract with one entity, and then have it transferred to another without your agreement. From what i've heard, those transfers aren't purely formalities either, people get hit with weird charges sometimes.
- wonderwonder 4y ago
  Even nicer is often if the borrower defaults that loan is sold to aggressive debt collectors for pennies on the dollar. Those debt collectors now hound you and litigate against you to get as much from you as they can. This is rampant with cc debt.
- linuxftw 4y ago
  > mortgage-backed securities This describes the US system as well. The 'servicing' (who you pay each month) of the loan might change hands, but the underlying debt was bundled and sold off already. In the US, many banks don't service loans. I assume, that "Fund X" buys the securities using funds from 401ks, etc, and they kick the servicing to a preferred partner. The partner gets paid some cut. The fund gets the yield, the fees are paid out to to the servicing entity. This is why the 2008 event was so disruptive. Mortgage brokers were labeling everything as AAA, and the funds were buying them up. Banks weren't risking their own capital, they want the 401k holders to own the debt, and they just take their cut. It's a nice racket, can't figure out how to break in, though.
- dymk 4y ago
  I don't see how it's weird. You do agree that the debt can be sold to somebody else. And it's not like anything actually changes, other than the payment portal you use. It's an incredibly tightly regulated system, and the buyer of the debt is still subject to the exact same contractual obligations that the originator had.
  - iancmceachern 4y ago
    It's not that I think it's weird because I think something shady is going on. I think it's weird because where does this process add value? I argue it doesn't. In my experience, things like this, financial instruments, the people that sell them and make a living in the churn only make their money when there is a transaction. The more transactions, the more fees and etc. they can charge. They make money when money changes hands, not necessarily by making something of value.
    - 4y ago
lsaferite 4y ago
Mine has just been resold back to the original lender as far as I can tell. Very weird.