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Profile picture for thomashewittedward

Is a mortgage that can't be sold" better" than one that is saleable?

  • April 27 2010 - US
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Answers (11)

There is still something fishy about the info you are being told. You say "a mortgage company" says blah blah... If it is indeed a Mortgage Co., meaning a Mortgage Banker or Direct (non depository institution) Lender, the likelihood of them selling the loan is as high, if not higher, than a depository institution selling the loan.

I believe what you are referring to is the servicing of the loan. A "Mortgage Co." may retain servicing of most of their loans, but are nearly certain to sell the actual loan, to some type of investor, so they can re-loan the funds.

As said below by the consumate experts, it hardly even matters, but the experts don't say, except for the fact that they may be intentionally misleading you, or they may be too lazy, or inexperienced, to explain the pertinence of the issue to you. I'd run from them as quickly as possoible.
  • April 28 2010
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It's spin...nothing more.  As long as the terms of your loan does not change and they can't why would it matter who you send the check too?

Some folks like to be able to know they can walk into a local branch to make a payment...if that's imprtant to you then explore small local banks that don't sell or sell a small percentage of their loans...if it doesn't matter don't worry about it.
  • April 28 2010
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It typically does not matter. The only benefit that I could see would be if they were to make some sort of exception to guidelines to approve your loan. In that case, they would be more likely to make the exception knowing that they do not have to underwrite to a 3rd parties guidelines. Exceptions are few and far between in this market, but if you were going to get one, it would most likely be from a lender that is going to service the loan themselves.  You may gain benefit from working with a bank that you have a relationship with. Some local banks will offer below market rates on loans that they service to long time customers.

If your loan is pretty straightforward, I don't think it makes a difference who you make your payment to.
  • April 28 2010
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Profile picture for thomashewittedward
maybe I worded the question wrong. a mortgage company I've contacted says they never sell their loans, comparing themselves to other lenders that commonly do sell. just wondering if it really is a plus or just a neutral.
  • April 28 2010
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I don't think there is any such thing as a "mortgage that can't be sold". There are mortgages that are less likely to be sold. Debt instruments are transferable and assignable, period. That's what makes the markets work.

A mortgage loan may not be sellable to Fannie or Freddie, but they re not the only buyers of Mortgage paper. A loan servicing may be very unlikely to be sold, but that is not the same as the loan not being sold.

Who, if anyone, made this claim? Or, did you just hear some street myth?
  • April 27 2010
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Many portfolio lenders will lend on terms "outside the box" as set by Fannie Mae and Freddie Mac, making the loan "unsaleable". Often local credit unions or Savings & Loan associations will make loans locally on unique properties or in unique situations that you might not otherwise be able to obtain from a large lender.  Regardless, if you've closed and obtained the financing you needed then you should be good to go.     
  • April 27 2010
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Even portfolio lenders on occasion sell their loans. This should not concern you at all. If a loan gets sold it's just a different name you put on your check. ..... Happy funding, Rudi
  • April 27 2010
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Depends why it is "unsaleable".  If its because you do not qualify for the loan under normal guidelines then it may be bad for you!
  • April 27 2010
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Profile picture for Erez Cohen
It does not matter-  The note you sign at closing will indicate rate-  If your loan is sold off and a new servicer takes it over, you will be given ample time to know whom to make the new (EXACT SAME AMOUNT) of payment to.  Nothing will change except possibly the address of where your payment gets mailed to-  No worries-
  • April 27 2010
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Once the loan has funded your terms will never change. You may pay the bill to someone else but they can never change the terms of the loan.
  • April 27 2010
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I loan that can't be sold on the secondary market is likely riskier than one that can.  I would argue the exact opposite, since the loan is not saleable you will end up paying a higher premium for the loan.
  • April 27 2010
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