Don’t need answer fast because this isn’t actually happening (at least not to me.)
It is, of course, perfectly legal for your mortgage holder to sell your mortgage to another company. But suppose you got notice that your mortgage was being sold to a company that you consider to be unethical. To use a fictitious name, say someone’s mortgage is being sold to Hell’s Cargo. Hell’s Cargo has long and ongoing history of shady practices, like:
*Foreclosing on a home that never even had a mortgage and disposing of or destroying all the owner’s personal belongings.
*Foreclosing on a home even though all payments were made not only on time, but early.
among other things. Does a homeowner have any recourse to keep from being forced to do business with a company they find abhorrent?
Refinance the note with another bank you like. They’ll pay off the mortgagee you don’t like and you’ll be able to hope the new note doesn’t get sold too.
Refinancing may not be an option for a lot of people. We had a heck of a time refinancing our first home, which had a balloon payment after five years. The problem was that the principal was low enough that no lenders wanted to write mortgages for that small an amount, but too large for us to qualify for any kind of personal loan.
But anyway, the question isn’t what can the homeowner do after the fact. It’s can the homeowner prevent it from happening in the first place? If I understand correctly, the mortgage holder has to notify the homeowner fifteen days in advance. So is there anything the homeowner can do between that notice and the transfer of the mortgage? And to be clear, I’m not talking about preventing the note from being sold at all, just to one particular company without having to go through the time (which would surely take more than fifteen days) and expense of refinancing.
I suspect the short answer may be “no”, which I don’t like, but only has a small chance of ever affecting me personally.
You probably signed something in the mountain of mortgage papers you had to sign that says “Yes I agree that my mortgage company can sell my mortgage to any other company at any time, regardless of their evilness.”
I actually tried to read some of the stuff I signed with my original mortgage and I’m pretty sure that sort of thing was in there. I also refinanced shortly after I got sold to Bank of America (at a cost, of course).
This is the first I’ve ever heard that the homeowner even has to be informed at all, when your bank sells your mortgage to someone else. Typically, the original bank continues to service the loan (that is, you continue to make payments to the original bank), and the owner doesn’t even necessarily know that the original bank is no longer the mortgage holder.
We were notified when ours was sold to a not-evil-as-far-as-I-know company and we now make our payments to the new company. This was my source of info for the fifteen days notice requirement.
Just FYI, the note that obliges you to pay back the loan and the mortgage that secures the note are separate documents. Before MERS, you probably didn’t need to know this. Now, it might be a good idea.
Nolo.com, a well-known self-help legal web site has good but succinct summary.
I don’t think there’s a way to prevent it, but I’ll say this- “Hell’s Cargo” as you call them, has actually been terrific to deal with about our mortgage.
Great website, clear and easy to deal with online tools, automatic bill pay, no closing costs refinancing, etc… much better than the originating mortgage lender was from a consumer perspective.
Has anyone tried to negotiate this as a deal? E.g., "I’ll pay an extra $100 a year if you agree not to sell the mortgage to any company on this list <provide list> or sell it to any company without first getting promises equivalent to these out of them not to sell it to one of those companies and to require such terms out of anyone they sell it too.
How much would such an agreement be worth? Would you have a better chance of getting a small town bank to agree to this?
I don’t know the answer to your specific question, but my mortgage lender the first time around swore up and down that they wouldn’t sell my mortgage if I went with them. I don’t know why she said this, since I didn’t particularly care one way or the other. Of course, 30 days after closing, they did in fact sell my mortgage, but since they continued to service the mortgage, I really didn’t care.
If I were to guess at an answer, I would say most banks, even small ones, don’t want extra strings attached and they are doing plenty of business whether you choose to get your mortgage there or not.
My mortgage is only 6 years old, and it’s been sold twice already, which was surprising to me. Luckily, no issues with the transfer and no problems with the lender.
It does seem there should be some sort of consumer protection against this, though.
I suspect that it’s going to cost a lot more than a hundred bucks a year to change their processes just to satisfy your reluctance to do business with Wells Fargo. At the very least, they’re going to have to have an attorney, either on-staff or on retainer, review and approve the changes to the standard contract. These lawyers probably bill their time at more than a hundred bucks an hour. Second, they’re going to have to segregate your loan from every other loan they have, as the rest of their loans can be freely sold. There’s no way that they can easily do this.
Your chances are slim unless the bonus is really dramatic. It takes your loan out of the bundle and makes it an individual, with strings attached.
Even doing something fairly normal like avoiding escrow for taxes etc puts you in a special category, and you won’t get the lowest rates (been there done that won’t do it again).
Mortgage company employee here. I can speak for other companies but I’m assuming it’s basically the same nationwide. We lock in loans to sell to another company pretty much as soon as you fill out an application. Changing locks is time consuming and will pretty much always cost money. It’s really only done if we can’t sell the loan for some reason or another to a certain company. Also, by the time you get a notice, it’s already been sold.
I have had a few loan officers promise not to sell a loan to a specific place. It’s usually a gigantic headache, and they’re prohibited to do so now.
Also, regarding Wells Fargo, they are the largest mortgage company in the country, so it’s not surprising they have negative stories.
