Can Mortgages Be Assigned?

Mortgage loans are bought and sold many times over their lives.

Mortgage loans are bought and sold many times over their lives.

Many mortgage borrowers mistakenly assume that the lender to which they're making their loan payments actually owns their loan. In reality, the majority of mortgages in the U.S. are owned by large investors and mortgage repurchasers. The government-sponsored enterprises Fannie Mae and Freddie Mac, for instance, purchase lenders' mortgage loans and assign loan servicing rights back to them. Mortgage loans, in fact, are frequently assigned by the lenders or investors owning them to other lenders or investors.

Sale of Mortgages

When you obtain a mortgage loan, the lender making it will usually sell it off to an investor-type organization. Typically, conventional or non-jumbo mortgage loans are sold by the lenders to Fannie Mae or Freddie Mac. Fannie Mae and Freddie Mac package vast numbers of mortgage loans, using them for investment purposes to generate income to enable additional mortgage lending. Mortgage loan repurchasers, though, don't deal directly with those loans' borrowers; they assign the mortgages they own to loan servicers.

Assignment of Mortgages

Chances are high that if you take out a conventional or federally backed mortgage it will be bought and then assigned to a servicer. Mortgage loan servicers are financial organizations approved to oversee or service mortgages on behalf of their true owners. When your lender sells your mortgage loan, you'll receive a letter from its purchaser informing you of its sale and also its assignment to a servicer. The lender making your mortgage loan may even be assigned its post-sale servicing rights.

Mortgage Loan Servicers

Mortgage loan servicers are basically the middlemen existing between mortgage borrowers and the investors owning those borrowers' mortgage loans. Your assigned mortgage servicer collects your mortgage payments and otherwise handles all aspects of your loan, including foreclosing it should you default. Mortgage loan servicers compete for mortgage assignments and they make their income from the fees assessed on mortgage loans. Part of the interest you pay on your mortgage loan goes to pay your loan's assigned servicer for its work.

Loan Servicer Selection

As a borrower, you won't have any input into the selection of your mortgage loan's assigned servicer. Also, your mortgage loan may be bought and sold as an investment vehicle multiple times over its lifespan. You'll be informed by letter, though, whenever your loan is assigned a new servicer. Your mortgage's old servicer is responsible for ensuring your loan account is transferred to your new servicer, and that includes transferring any accumulated mortgage escrow funds.

About the Author


Photo Credits

  • Photodisc/Photodisc/Getty Images
Suggest a Correction