The How's and Why's of Your Mortgage Being Sold
Unfortunately, in the world today, technology has made it easier than ever for con artists and grifters to take advantage of good, honest folk through phone and mail. To think it is 2019 and it was all the way back in 1990 when the federal government passed RESPA, short for the Real Estate Settlement Procedures Act. E-mail wasn't even really a thing back in 1990, nor was there an internet to mine information from, and the high volume of mortgage fraud was such a problem the feds had to get involved; to me that truly says a lot. While unfortunately it is easier than ever for charlatans to get your personal information in an attempt to dupe you out of money, there are laws in place in order to keep you safe. For a full transcript of the Real Estate Settlement Procedures Act, click here to view RESPA on the Consumer Financial Protection Bureau's official website. Spawned from the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, creating this federal bureau dedicated to protecting the financial assets of citizens of the United States of America was one of Washington's responses to the Great Recession which followed the 2007/2008 financial crisis. No worries if you don't feel like giving yourself a refresher on legalese while sifting through numerous pages of legal paperwork as you don't need to; there's only one thing that you need to know about RESPA, and that is how at its core it protects your mortgage. See, if your current lender decides to sell your debt to another corporate entity or individual person, both the old and new financial institution have to correspond with you to make you aware of said transaction, while clarifying the terms and conditions of your current loan will not be changing in an unsatisfactory or unscrupulous manner. If you think you are being taken advantage of by a con artist, check with your current lender, as they may or may not be your current lender still. Generally speaking, it's not unusual for a correspondence from your new lender to arrive before a letter from your previous mortgage holder, so if you see something, don't immediately panic. Just call who would call you if you were late on your payment the previous month, and go from there. If your mortgage has been sold yet you think your new lender is attempting to take advantage of you, be sure to contact the Consumer Financial Protection Bureau at their website by clicking here. The other useful safeguard to remember is that once your mortgage is sold, you are offered a 60 day grace period on late payments if you instead had paid your previous lender. They are legally obligated to reroute your check for you, so you won't have to worry about your previous mortgage lender pocketing your money after selling your debt. And if that does happen, there are laws and transaction histories to save your hard earned cash. Who wants to pay their mortgage twice in a month?The secondary mortgage market is more common that most people realize. Gigantic organizations like FannieMae or FreddieMac will go the Costco route and scoop up so many mortgages at once, they'll get a bulk rate discount. This provides lenders with huge cash infusions to inject into their business and further expand their abilities, while the new mortgage holder is obviously going to make a profit in the long run by holding onto so many debts. This offers additional incentive for lenders to get into the mortgage business in the first place. If you know you can sell your mortgages in the secondary mortgage market, the risk of lending is decreased tenfold. Some people will get into the mortgage business simply to eventually sell their collection of debts for a a substantial amount.
It may be annoying having to keep track of who happens to own your mortgage at any given time, but in reality, it works out for you just as well as it does the lending institutions profiting off of the housing market. When I say that in conversation with people, they look at me strangely, but it's simple economics. The more lenders there are, the cheaper lending prices are going to go for. The more incentives there are to engage in a particular sort of business, the more people there will be involving themselves in that particular market or field. So because some business folks treat mortgage's like some kids collect Pokemon, it draws more and more people into the mortgage business, lowering prices for all. The secondary mortgage market serves such a huge benefit to all of our pocketbooks, and yet most of us have no idea its even there!
For even further protection, to both lenders and homeowners alike, exists the non-governmental Mortgage Bankers Association. Governed by a thirty-six body Board of Directors, the MBA is associated with over two thousand lending institutions throughout the USA. While not a governmental body, they do have a platform dedicated to lobbying, and generally try and show support for candidates with a strong understanding of real estate law. Their website can be found by clicking here, and is a great resource for lenders, those thinking about getting into lending, and homeowners who have open mortgage loans out. Their website is an awesome educational tool and I hope you all find as much knowledge and enjoyment in it as I have.