Why do mortgage companies transfer or sale mortgages?

Just wondering. Have never been late on a payment and just was wondering. When I called old mortgage company and new, they both say that this is just standard practice....

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  • 1 decade ago
    Best Answer

    Sometimes they get too many on the books, so this is a way to maintain a certain number of mortgages. Also, some finance companies are in the business to make a quick profit, meaning they are willing to settle for a small profit on the now and not the large profit that will take 20 years to collect. The more they can sell, the more they make by volume. I hope this helps you.--Everyone that is answering this question is right on target.

    Source(s): life observation and some schooling in that area.
  • 1 decade ago

    They are right in that it is standard practice. There are generally lenders that acquire mortgages and there are lenders that service mortgages. The acquisition company is the company you close with; the company you may make your first payment to. They receive the underwriting and closing costs, but do not want the hassle of servicing the loan. They then sell it to a lender that services loans. That company will service the loan and collect the interest and any applicabe charges (such as late fees, etc).

    All of this is done based on the companies abilities and desires; some companies acquire and not service, some don't acquire but service.

    Source(s): Worked for a mortgage company for 3 years and have worked for a title company closing on mortgage transactions for the subsequent and last 3.
  • 4 years ago

    there are several aspects to this issue. The mortgage company usually does not hold the note and yes they sell them all the time. If you look at your mortgage documents it will tell you the mortgage companies holdings and the prospects about it being sold. Mort age companies often hire SERVICERS to take payments and monitor the payments. The fact that you are in the middle of a modification is concerning to me because the new holder might just see it as delinquent and foreclose. Keep very good records and contact the new holder ASAP

  • 3 years ago

    When a mortgage is almost paid off (say two years remaining) there is little interest to be collected. Greater than 90% of the home owners payment goes toward the principle and not interest therefore it is not a "money maker" anymore so they sell it off to a smaller outfit.

    Be careful with the new loan servicing people thought. You need to be sure they make up lies and hold your payment and say it is late. Serialize your payments on your check and get it there two days early. Send it by US mail 2 day priority. That way you have a receipt that you mailed it. It costs about $5 to do this but it covers your butt.

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  • Anonymous
    1 decade ago

    Yep, just a standard practice. They gather a bunch of mortgages they hold and package them together to sell to another mortgage house, usually at a discounted rate. Doesn't have anything to do with your credit history or payments.

  • Anonymous
    1 decade ago

    It is standard business practice for some lenders. They make their money from origination fees and not from holding the loan while it pays interest. They do not want to tie up capital. They want to focus on the marketing and sales of new loans and let other investors hold the loan to collect the interest.

    Very standard process.

  • Anonymous
    1 decade ago

    it's just standard practice. but the truth is that some mortgage companys what or need more mortgages, and it's easier to buy them,

  • Anonymous
    1 decade ago

    mortgage bankers are always buying and selling. they buy what they think is a great rate but when rates change they unload some to freddie mac and others to get cash to buy better deals. around and around they go. wierd huh? that is capitalism 101. unless you have an adjustable mortage, you pay the same etc. each month. not affected. god knows if you have a nonstandard longterm loan these days. reminds me of musical chairs. Peace and bless you dear. (appreciate yor vote, thank you.)

  • kja63
    Lv 7
    1 decade ago

    That's it -- standard practice.

    Your current company sells off a block of "less than desirable" mortgages to them, that another company finds no problem with.

    It has nothing to do with you :-)

  • Anonymous
    1 decade ago

    They sell them to other lenders who in turn bundle a bunch together and sell the entire portfolio of loans on Wall Street, that way they have more money to keep making loans

    Source(s): 25 years as a Real estate sale and finance pro
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