by Karen Lawson
Recorded documents trace ownership of real property and mortgages.
A mortgage holder is the individual or entity (typically a company or group of investors) that owns a mortgage loan. Mortgage lenders frequently sell mortgage loans to government-sponsored entities such as Fannie Mae, Freddie Mac, Ginnie Mae or private investors. This provides cash for funding new mortgage loans and is a common practice in the US mortgage lending industry.
My Mortgage Just Closed and Now I Have a New Lender
Soon after closing a residential mortgage loan, you may receive notification from your lender that your mortgage has been sold to Fannie Mae, Freddie Mac or another investor. This company is now the mortgage holder or owner of your mortgage loan. Although you may continue to make payments to your original mortgage company, it's possible that a third company will be designated as your loan servicer. Mortgage loan servicing companies accept payments, pay hazard insurance and property taxes, and take care of day-to-day administration of mortgage loans on behalf of the mortgage holder.
Transferring Mortgage Holders Does Not Change Your Mortgage Loan
When mortgage lenders originate and close mortgage loans, they underwrite each loan to meet
the standard of the purchasing entity. Fannie Mae and Freddie Mac underwriting standards are typically used for most conventional residential mortgages. Mortgage loans underwritten to these requirements are generally sold to either Fannie Mae or Freddie Mac quickly after closing. No terms of a mortgage contract are changed as the result of selling a mortgage loan to a new mortgage holder. Transferring a mortgage loan is done by recording either an Assignment of Mortgage or Assignment of Deed of Trust. The recorded assignment appears on any title search for the property securing the mortgage.
Mortgage Holders and Mortgage Loan Servicing Companies
Large mortgage holders such as Fannie Mae and Freddie Mac engage loan servicing companies to manage their portfolio of mortgage loans. Loan servicing companies receive a fee for managing mortgage loans according to the requirement of the mortgage holder. Your mortgage servicing company may advise you that it must "get the mortgage holder's approval" for special requests such as payment plans, loan modifications, or short sales. Your mortgage servicing company acts as an agent for the owner of your mortgage loan, and as a link between you (the borrower) and the mortgage holder.
Why are Mortgages Sold to New Mortgage Holders?