You recently received a letter informing you that an investor has acquired your mortgage. Given that you carefully selected the mortgage lender you wanted to work with, you might feel upset or confused. Does this alter or jeopardize that decision?
We have good news: You don’t have to worry. This is a totally normal part of the mortgage process. Your mortgage is still serviced by Rocket Mortgage®, and you will continue to receive the excellent customer care you received prior to closing.
Who Sells Mortgage Loans?
After purchasing a home, you might get a letter informing you that an investor has bought your mortgage loan. The short answer is that it was sold by banks and lenders.
Why are banks selling mortgages? Well, it’s all about liquidity. For banks and lenders to continue providing mortgages to homeowners, they must have enough money. One of the three government-owned or government-sponsored mortgage companies, Fannie Mae, Freddie Mac, or Ginnie Mae, will typically be the purchasing investor. There are times when a smaller, non-governmental investor will buy your mortgage.
It might be helpful to first go over a few different terms before we get into the “why” of mortgage investors.
An organization that lent you the money to buy your house is known as a lender, who can also be referred to as a mortgage originator in the secondary market. One of the initial steps in purchasing a home is contacting lenders because the borrower needs to find an interest rate that fits their financial situation.
The organization that manages your mortgage after you’ve closed on your home is a servicer. They’re the people you send your monthly mortgage payments to.
The company that purchases mortgages from lenders is known as an investor, who may also be a mortgage aggregator. Investors include the Federal Housing Administration (FHA), Freddie Mac, Ginnie Mae, and the Department of Veterans Affairs (VA), all of which buy conventional loans.
In some cases, lenders will continue to have servicing rights for mortgages they created even if an investor buys the mortgage itself. As a result, even though you continue to work and make payments to the same lender from whom you obtained your loan, that lender is no longer legally the owner of the mortgage. Your payments are collected by the servicer, who then sends them to the investor.
Avoid using the terms above interchangeably with “bank,” which is frequently used in a general sense without providing any information about the entity’s involvement in your mortgage.
Why Do Banks Sell Mortgages?
Again, it’s all about liquidity. To provide mortgages to homeowners, banks and lenders must have sufficient funds. Financial stability is crucial for all parties involved in the mortgage process given how frequently the real estate market changes.
Think about the typical 30-year loan term. A mortgage lender will have less money available to offer future mortgages if its funds are committed to that transaction for the full 30 years. The lender now has the capital and cash flow to continue lending to other borrowers as a result of allowing the mortgage to be sold to an investor.
This procedure is a component of how the mortgage market functions on a larger scale. Investors maintain market liquidity so lenders can keep assisting borrowers in buying homes.
While selling mortgages is extremely common, it’s important as a homeowner to understand the process as well as who is involved. No matter where life takes you – whether that’s a new home or a home refinance – we’re here to help you every step of the way. Contact us today to speak with a Home Loan Expert!
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With a focus on personal finance, automobiles, and personal loans, Hanna Kielar is a Section Editor for Rocket AutoSM, RocketHQSM, and Rocket Loans®. She has a B. A. in Professional Writing from Michigan State University.
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FAQ
What is the downside to Rocket Mortgage?
Cons. A credit check is necessary to receive a personalized interest rate, and this could lower your credit score. Doesn’t offer home equity loans or lines of credit. The most recent federal data show that origination costs are higher than those charged by other lenders.
Why did Rocket Mortgage sell my loan to Freddie Mac?
Why Your Lender Sold Your Loan. Freddie Mac is one of the companies that lenders frequently sell home loans to after you’ve closed on your house. Lenders are able to continue making more home loans by selling their mortgages to organizations like Freddie Mac.
Does Rocket Mortgage do their own loans?
Does Rocket Mortgage service its own loans? With the exception of jumbo loans, we service almost all of our loans. For many clients, this means that you can continue to use Rocket Mortgage® to manage your loan after we close it.
What bank owns Rocket Mortgage?
Mortgage loans are offered by Rocket Mortgage, LLC, formerly Quicken Loans LLC. Rocket Mortgage. FormerlyRock Financial (1985–1999) Quicken Loans LLC (1999–2021)OwnerDan Gilbert (93. 2%)Number of employees24,000 (2020)ParentRocket Companies, Inc.