Who Owns Your Mortgage?

In the aftermath of the subprime mortgage crisis of 2008-2011 and embarrassments such as the robosigning fiasco, the US mortgage lending industry has undergone some housecleaning and streamlining, with new regulations in place to protect mortgage holders from abusive practices and to create mew standards for lenders. But even with all these changes in place or on the way, many mortgage holders, whether investors or homeowners, don’t actually know where their loan originated.

Tracking down the originator of a mortgage can make a significant difference in eligibility for refinancing and other breaks. Most prospective property owners who apply at a major bank such as Wells Fargo or Bank of America believe that their loan is actually owned by that institution. But over half the mortgage loans approved in the US originate with two government mortgage lenders – the Federal National Mortgage Association, affectionately known as Fannie Mae, and the Federal Home Loan Mortgage Corporation, or

Freddie Mac.

These loans are then “serviced” by a variety of lenders, typically major banks, that handle administrative work related to creating and managing the loan. Interestingly, loans offered through small local lenders are more likely to originate with that lender itself than those available through the larger institutions. Some loans are also offered and serviced through government programs such as the Federal Housing

Authority (FHA) or the Veterans Administration.

Mortgage loans can also change hands several times, as loans are bought and sold by both government and commercial lenders due to a variety of circumstances. A loan that originated with one lender can end up owned by another, and only those who read a lot of fine print may be aware of the switch.

Why does it matter who owns your loan? In general, it doesn’t matter much at all. If a property owner holds a 30 year fixed rate mortgage, or even most other common loan products, as long as payments are made on time and no problems arise, it’s possible to continue for the life of the loan without knowing – or caring — where it really originated.

But if that same property owner decides to refinance the mortgage, or ends up needing help avoiding foreclosure, the origin of that loan can matter a great deal. Some refinancing programs such as HARP, (Home Affordable Refinance Program), which helps homeowners who are struggling to get traditional refinancing, are available only for mortgages owned by Freddie Mac or Fannie Mae – even if the loan is serviced by someone else. Likewise, various disaster assistance and payment suspension programs are offered only for certain kinds of loans.

Jason Hartman”s advice for finding out who owns your mortgage is this. Both Freddie Mac and Fannie Mae offer a loan tracker on their websites, which allows users to input the name of their financial institution and some other information to determine whether their loan is owned by either of these agencies. A direct inquiry to the lender can also reveal the loan’s owner.

Under most circumstances, discovering the entity that originated the loan won’t affect the payment schedule – or much of anything else. But in others, knowing who owns your mortgage can save you money — and open doors to new opportunities. (Top image: Flickr/elbragon)

The American Monetary Association Team

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