My Loan Was Sold

Dated: 04/24/2019

Views: 113

My Loan Was Sold. What Gives?

You've just moved in to your new Coachella Valley home. You've unpacked, and you're starting to settle in when you receive a letter informing you that your mortgage has been sold and is being serviced by a new institution. Is this allowed? Have the terms of your mortgage changed? Why would your lender sell your mortgage?

Among the many documents you signed when you first applied for a loan was a Mortgage Servicing Disclosure. This document tells you what percentage of the lender’s loans are sold. More often than not, the majority of loans approved and funded by a particular mortgage company will be sold to someone else. It's important to note that just because your mortgage has been sold, this does not change the terms of your loan. Your loan payment and interest rate will not, and cannot, be impacted.

Image title


You’re probably wondering, “Why go through all the effort of originating, approving, and funding a loan just to forgo all the interest that new loan provides?” The answer is surprisingly simple. If not for selling the loan, the lender would soon run out of money to lend.

Mortgage companies today work with a line of credit. It’s not as if the mortgage company approves a loan then opens up a vault full of money to fund your mortgage. When it’s time to fund your loan, the lender taps into the line of credit for the necessary amount. In order to replenish this line of credit, the lender sells the loan to a third party. Once the loan is sold, the lender now has more funds to make more loans. Who is the loan sold to? Many times it’s sold to other mortgage companies, but ultimately the loan is sold either to Fannie Mae or Freddie Mac.

The marketplace for all this loan buying and selling is called the secondary market for mortgages. This secondary market is robust and active and keeps the mortgage market liquid. Without a secondary market, there would be fewer loans issued and still fewer choices. When your loan is sold it’s not because your original lender doesn’t appreciate your business, it’s so they can continue to service other home buyers and make more loans. 


Copyright 2019 Keller Williams® Realty, Inc.

Blog author image

Diana Hopkins

Diana is a 20 year veteran of the Computer Software Industry, specializing in Computer Software sales and service. Her focus is client advocacy, outstanding customer service and going the extra mile ....

Want to Advertise on this Site?

Latest Blog Posts

3D Tour For 1471 El Alameda Palm Springs CA

Please take a few minutes and look at this magnificent Spanish hacienda located in the E. Movie Colony, Palm Springs. It all comes together in this 1947 Spanish Colonial revival. 2620 sq. ft., 5

Read More

Friday Food Find In Coachella Valley By Eve Zimmerle Part 2

March 29:  Eves Friday Food Find: Back in Old Town La Quinta, family friendly people and delicious Italian fare @ Fortun's Happy Hour, 3-7pm...housemade italian sausage is a winner! Start

Read More

Total Market Overview Q1 2019 Coachella Valley Real Estate

The numbers for the first quarter 2019 are in and for the most part the market is in a very familiar place. Housing inventory is low and it remains a seller's market. That said, activity has cooled

Read More

My Loan Was Sold

My Loan Was Sold. What Gives?You've just moved in to your new Coachella Valley home. You've unpacked, and you're starting to settle in when you receive a letter informing you that your mortgage has

Read More