Dear Dr. Don,
I recently purchased a home with a new fixed-rate mortgage. However, the big-name company that bought my mortgage is teetering on the verge of big financial loss and an SEC investigation.
What happens to my mortgage if the company goes belly up? Do I need to take any safeguards or wait on the sidelines until I get a new mortgage statement from whoever buys the assets?
-- Concerned Kathy
Dear Kathy,
You got your money at closing. What's important now is that your payments are properly credited to the repayment of the loan. Your home mortgage is a valuable asset in an investor's portfolio. A mortgage lender may need to sell that asset to free up cash, but the audit trail of your payments keeps you compliant with the loan agreement.
I understand your concern but, short of refinancing, you don't have a lot of control over this situation. And I'm not advocating that you refinance in this situation. Keep in mind that the firm that originated your mortgage may no longer have your mortgage in its investment portfolio, and that the mortgage servicing component of your loan can be sold to another party. (Mortgage servicing is the management of the payments associated with the mortgage.)
Again, your mortgage loan is an asset to the investor that has it in its portfolio. That asset can be bought and sold without your permission. It's your credit and payment history that influences the value of the mortgage in the investor's portfolio. The same is true with mortgage servicing. The mortgage service component of your loan can be bought or sold.
Your best defense is to keep tabs on your mortgage payments and any escrow payments on your loan. That way, you can make sure your loan payments are properly credited to interest expense and principal repayment and that your property taxes and homeowners insurance are being paid on time.
I recently purchased a home with a new fixed-rate mortgage. However, the big-name company that bought my mortgage is teetering on the verge of big financial loss and an SEC investigation.
What happens to my mortgage if the company goes belly up? Do I need to take any safeguards or wait on the sidelines until I get a new mortgage statement from whoever buys the assets?
-- Concerned Kathy
Dear Kathy,
You got your money at closing. What's important now is that your payments are properly credited to the repayment of the loan. Your home mortgage is a valuable asset in an investor's portfolio. A mortgage lender may need to sell that asset to free up cash, but the audit trail of your payments keeps you compliant with the loan agreement.
I understand your concern but, short of refinancing, you don't have a lot of control over this situation. And I'm not advocating that you refinance in this situation. Keep in mind that the firm that originated your mortgage may no longer have your mortgage in its investment portfolio, and that the mortgage servicing component of your loan can be sold to another party. (Mortgage servicing is the management of the payments associated with the mortgage.)
Again, your mortgage loan is an asset to the investor that has it in its portfolio. That asset can be bought and sold without your permission. It's your credit and payment history that influences the value of the mortgage in the investor's portfolio. The same is true with mortgage servicing. The mortgage service component of your loan can be bought or sold.
Your best defense is to keep tabs on your mortgage payments and any escrow payments on your loan. That way, you can make sure your loan payments are properly credited to interest expense and principal repayment and that your property taxes and homeowners insurance are being paid on time.
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