My Loan Was Sold

Dated: 04/24/2019

Views: 183

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

Buyers Guide To Cathedral City CA July 2019

Looking to move to Cathedral City, California? Let’s start with the basics: Cathedral City is located in Riverside County. It has a population of 53,700, and we have a graph below that shows

Read More

July 2019 Palm Springs Housing Report

The Valley's median detached home price in July reached $417,500, which is 4.4% above a year ago. The attached home price index for the Valley ended July at $285,000, which is a gain of 1.9%.

Read More

3D Tour For 37165 Palm View Road Rancho Mirage CA

Please take a few minutes and look at this custom contemporary luxury estate in Rancho Mirage.Timeless, is this custom contemporary in the prestigious Tamarisk area of Rancho Mirage. 4235sq.ft. with

Read More

3 Home Modifications That Can Lessen Your Homes Value

Renovating, remodeling, and improving your home can be great ways to give it a makeover, gain extra space, or otherwise make it possible for you to stay in one place longer. But will they increase

Read More