I'm really curious if anybody can give some incite on the subject of selling mortgages.

I closed on a house on Aug 23 of this year. Within a week my mortgage was sold. Wasn't that surprised by it. Before my first payment was due, my mortgage was sold again. That one took me by surprise.

Made the first payment to the third owner was on Oct 1. Today, I got a letter saying that the mortgage has been sold again.

I'm totally ignorant on finance and the mortgage business. Is this normal or is there something in the market that is causing behavior like this now?

How confident are you all of those were the loan being sold? Seems more likely servicer changing would be in the mix too.

I rememeber asking my mortgage bank to not sell my mortgage so I could add more down payment to it later under the same mortgage I forget what that's called but long story short it's apparently common to sell the mortgage because it was a thing to deal with to make sure they did not sell

jja79 said:

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That's a recast and should be available with any servicer.

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That's the word, recast

They told me if it was sold it may not be possible

FWIW I've been retired from that business for 3 months but I never ran into one that wouldn't recast.

Big_Russ said:

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I'm really curious if anybody can give some incite on the subject of selling mortgages.

I closed on a house on Aug 23 of this year. Within a week my mortgage was sold. Wasn't that surprised by it. Before my first payment was due, my mortgage was sold again. That one took me by surprise.

Made the first payment to the third owner was on Oct 1. Today, I got a letter saying that the mortgage has been sold again.

I'm totally ignorant on finance and the mortgage business. Is this normal or is there something in the market that is causing behavior like this now?

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A large majority of mortgages are securitized right after sale (particularly conforming loans made by non-bank mortgage companies). It shouldn't change anything for you and the terms of the mortgage agreement that you signed.

This isn't something new. Defaults on RMBS were a major contributing factor to the financial crises of 2007/8. I don't know if the government has recently relaxed standards for conforming loans to juice this market. Perhaps someone else can comment.

It seems odd for the servicing right to sell 4 time in a short period of time.

They playing hot potato with mortgages.

Our first mortgage was never sold but that's because we had it with a smaller, regional bank (presumably).

Our second mortgage was sold about a week after we signed it. We then refied it and it was sold again right after that.

It is very common.

For the most part, the loan will be securitized within 1-2 months after origination. Probably one of those notices you saw related to this step, I'm guessing it mentioned Fannie Mae, Freddie Mac, Ginnie Mae.

The servicer that handles all the billing and is the middle man between you and the investor gets about 25 basis points of the loan amount each year for their role. That stream of revenue gets capitalized and is frequently resold. When that happens you will start sending your payment elsewhere. Sometimes that happens almost immediately, sometimes it might be later, sometimes never at all.

The selling of a loan has more to do with the business model of the originator you used to get the loan, than any specific economic/industry trends…for the most part.

I wouldn't worry about it.

As mentioned above there are two parts (for lack of a better term) of a mortgage: 1. The underlying mortgage debt and 2. the servicing of the mortgage which means collecting payments, providing customer service, foreclosing if needed etc.

The underlying mortgage is almost always sold into the secondary market as a securitization. This just simply means the debt is packaged up with 1000's of similar mortgages and sold as a mortgage backed security into the world wide bond market. The most common of these is Fannie/Freddie "agency" mortgage backed securities but even most jumbo or non-qm mortgages are sold into the secondary market.

These securities pay out a serving fee to the servicer to do the servicing functions mentioned above. Some lenders, usually smaller banks, may actual sell their mortgages servicing retained, which means that they do NOT actually own the debt but keep servicing the loan to give the borrower the impression they do to continue to cross sell other products.

Serving rights is a an asset like any other and is bought and sold, and goes up and down in value. If you have a portfolio of MSR with an average weighted rate of say 3% you can assume that your payoff rate will be pretty slow as no one will be refinancing those or in a hurry to payoff. So, one can assume the .250% of serving revenue will go on longer then a portfolio with a 7.5% average rate, making the 3% MSR more valuable.

So, as the market changes and lenders/servicers try to balance their risk/reward or servicing strategy they will buy and sell those servicing rights, but the actually underlying debt was sold at the outset.

Was one of them Mr. Cooper?

Everyone is moving risky mortgages down the line.