Question: I just refinanced my loan and before I could make one payment, the lender sold the loan. The new mortgage company is fine, but this is annoying given the effort and time taken to shop for a lender. Why does this happen? Do I have to refinance the loan again?
Answer: As you can imagine, most loans don’t last longer than five years due to constant refinance or sales. With a short loan lifespan, lenders hardly ever receive enough monthly interest payments to recoup their operating costs. This relatively new reality spawned a secondary loan market where a lender can sell your loan for slightly more than its current rate.
This may be annoying, but as a consumer you have certain rights. The terms of your loan cannot change and the lender is required to disclose the likelihood of such a transfer (in one of the closing documents you barely read). If you escrow your tax and insurance payments, keep an eye on the balances after a transfer because clerical accounting errors may occur. This information may be available online or through your lender’s customer service department.
Find some solace in the fact your diligent selection of a lender served to set the terms of your loan, by which all subsequent companies must follow.
Attorney James Haroutunian operates the Haroutunian Law Office at 790 Boston Road, Billerica, specializing in transactional legal matters such as real estate and estate planning. James invites questions from local real estate agents as well as consumers at 978-671-0711, prioritylaw.com, hlawoffice.org, or by email at firstname.lastname@example.org.