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I got a letter saying that my mortgage loan was "sold to Freddie Mac or to Freddie Mac as a trustee." Other interesting wording is that "the transfer of ownership... has not been publicly recorded."

What does this mean? Are there any gotchas that I should be aware of?


EDIT:

After doing some internet research, I came across the following. These comments and articles probably should be taken with a grain of salt, but seem to point out interesting issues in the broader scope of things. Do I need to worry about any of this?

http://www.mortgagenewsdaily.com/08052009_tbw_shuts_down.asp

I am in the same boat and has spent numerous hours on the phone. What I found out is very sad. Round Point, FDIC and FHA are on one side (A). Freddie Mac and CENLAR are on the other (B). My recently closed loan was supposely sold by TBW to Freddie Mac.... The letter I got from Freddie Mac said the transfer of ownership of my mortgage loan "has not been publicly recorded".... With the shut down of TBW..., FDIC steps in. At this point, all the A side (FDIC) wants is to have Freddie Mac show a legal proof that Freddie Mac really owns my loan.... But what I got from Freddie Mac was we are Freddie Mac, we do not need to prove anything to any one. ... Meanwhile I wonder if the letter I was promised can be consider a "legal" proof.... Round Point customer service supervisor told me that once FDIC has a proof that Freddie Mac owns my loan, then Round Point will drop off the scene. We tax payers spent BILLIONs bailing Freddie Mac out. It is an outrage that Freddie Mac won't even show the decency to help us out when it is Freddie Mac who created this mess.

http://www.lewrockwell.com/barnett/barnett27.1.html

They [Fannie Mae] just hold and own all the loans and take full responsibility for them, but they don't do the initial paperwork. First, where in the world does Fannie Mae get its money? They are trillions in debt, and are losing billions, so how can they do this? Does anyone dare to guess?

The bank... not only got paid up front to do the loan, but also gets paid by Fannie Mae for the life of the loan to service it. All this takes place without any risk of default whatsoever to the bank. In essence, they handle the paperwork, get paid up front, and continue to get paid for the life of the loan, and the particular loan is off their books immediately. Their reserve requirements are never altered, and all risk is eliminated and transferred to Fannie Mae... This is in essence simply a transfer of risk to us lowly taxpayers.

.... The banking system is using taxpayer monies delivered to them by the government through Fannie Mae and Freddie Mac, to make and service loans that carry no risk to them, but puts a great burden of risk on the citizenry.... [B]anks will look healthier than they really are and continue to pass off all risk, the losses and debt at Fannie Mae and Freddie Mac will be mostly hidden from the public, and the real estate markets will appear to be better off than is actually the case.

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The information in your added content seems pretty self explanatory. What is your question about it? –  user4127 Nov 14 '11 at 14:27
    
The problem here is that you just assume that the lender is the owner of the deed and note therefore they have a right to sell the deed and note. The very first step the alleged borrower should demand is "HOW DID THE LENDER GAIN OWNERSHIP OF THE CONTRACT" What did the lender put up to get ownership? Make them show how they funded the loan FIRST!!! If they can not show this then you can not go to step two! They have NO right to do anything with the deed or note if they can not show ownership! " I believe that the party that funded the loan should be the party that sales the loan or is repaid th –  Anthony Sep 23 at 15:36

1 Answer 1

up vote 7 down vote accepted

Lenders may sell your mortgage to other lenders for a fee. For example, your lender might sell your mortgage to the highest bidder who may want to purchase your mortgage by making a one time payment. For your lender that's a quick profit, for the new owner of your mortgage, that's long term returns for a one time fee.

For your lender, that is forgoing long term returns for short term gains (and transfer of risk in case you default).

(Very similar to how bonds work in a stock exchange!)

What does this mean to you? Nothing. You will still keep making payments to your original lender.

What does 'transfer of ownership has not been publicly recorded mean'? It means, when you are asked about ownership details regarding your mortgage, and this could be in tax forms or refinancing etc., you would enter your original lender's information and not Freddit Mac's!

Pro-tip There are lots of scams based on this. You might receive an official looking letter in mail claiming your loan has been sold and you should start making payments to the new owner. DO NOT FALL FOR THIS!

Call your original lender (use the phone number from your loan papers, not mail you received) and verify this information.

And if this were to happen, your original lender would always inform you first.

And hey, congrats on your new home! :)

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1  
Thanks for the answer and the tip! I found some interesting material online, and added it to my original question. I was wondering whether you could comment on them? (I'm guessing that this takes us into the realm of opinion and/or politics, but it all seems potentially educational to a newbie like me.) –  anon Nov 13 '11 at 21:33
    
The story in the links provided are in case your original lender goes under. In such a case, the ownership changes and you'd start making your payments to the new lender. Not a frequent occurrence, but it could happen. What's more common is that your original lender usually sells your loan to a different entity, but you continue making payments as before. –  MoneyCone Nov 13 '11 at 23:50

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