Possible Mortgage Scams
Due to all the recent mortgage shifting banks have been doing lately, these types of scams are becoming more popular. Many banks buy and sell mortgages all the time. Even the bank you may have obtained your original loan through planned on selling it right away. But if you have received a letter from a mortgage company that says your loan has been sold to them, and your payment now needs to go to a new address, don't do it.
You need a letter from your existing mortgage company first telling you they have done this. A new company will not just start taking your payments without the previous one verifying it first.
Congress took note of these scams, and in 1990 moved to regulate the assignment, transfer or sale of mortgage loans. As part of the National Affordable Housing Act, certain provisions were added to the Real Estate Settlement Procedures Act (RESPA):
1. The lender must disclose to the buyer its policy on assigning or selling loans when the borrower applies for a mortgage loan.
2. If a lender assigns, sells or transfers your loan, both your current lender and the mortgage buyer must make certain disclosures, including the name, address and telephone number of the new lender, as well as the effective date of the transfer.
3. All agreements must state that the transfer will not affect any term of the borrower's mortgage other than who's providing the loan.
4. A 60-day grace period is also in effect so that homeowners can't be penalized if they mistakenly send payments to the previous lender. Borrowers also cannot incur any penalties during this time, or late fees and black marks on your credit report.
Transferring mortgages are still common practice and organizations such as the FannieMae and FreddieMac purchase large packages of loans from lenders at a discount. This allows smaller lenders more cash available to generate new mortgage loans. [Check out our Snohomish County Real Estate affiliate for more details on mortgage options]
While having your mortgage sold over and over again can be inconvenient and annoying, is really is good for everyone. As more lenders are able to issue conventional mortgages the result is more mortgages, which helps keep interest rates competitive from lender to lender because consumers have more choices.
For more information on this topic or to start a loan process for Hurricane or St. George real estate feel free to send us an email below. We are happy to help home buyers in their process all along the way! [Our newest connection in personal property management has great advice on investing]