Why Do Lenders Sell Loans?  Why Do Lenders Sell Loans?


Why Do Lenders Sell Loans?

Written By: David Reed
Thursday, December 20, 2018

When you first work with your loan officer very early on in the process, yoursquo;ll soon establish a trusting >

Soon thereafter, yoursquo;ll receive payment information indicating where you need to make your payments. And for most funded loans, yoursquo;ll also receive another letter informing you the lender you originally worked with has just sold your loan to someone else. Someone yoursquo;ve never worked with before and even to a company yoursquo;ve never heard of. What happened to that >

Among the many initial documents you signed when you first applied was a Mortgage Servicing Disclosure. This form tells you what percentage of the lenderrsquo;s loans are sold and more often than not the form indicates most if not all of the loans approved and funded by that particular mortgage company will be sold to someone else. But why? Why go through all the effort of originating, approving and funding a loan and forgo all the interest that new loan provides? Good question and an easy one to answer- if not for selling the loan, the lender would soon run out of money to lend.

Mortgage companies today work with a line of credit. Itrsquo;s not as if the mortgage company approves a loan and then opens up a vault full of money to fund your mortgage. Instead, when itrsquo;s time to fund your loan the lender taps into the line of credit for the needed amount to fund the new mortgage. In order to replenish this line of credit the lender then sells the loan to a third party. Once the loan is sold, the lender now has more funds to make still more loans. Who is the loan sold to? Many times, itrsquo;s to other mortgage companies but ultimately the loan is sold either to Fannie Mae or Freddie Mac.

The marketplace for all this buying and selling is called the secondary market for mortgages. This secondary market is robust and active and keeps the mortgage market liquid. Without a secondary market, there would be fewer loans issued and still fewer choice. When your loan is sold itrsquo;s not because your original lender isnrsquo;t loyal to you or doesnrsquo;t appreciate your businesshellip;itrsquo;s to stay in business so the lender can make even more loans.





Copyright© 2020 Realty Times®. All Rights Reserved
Search in English Search in Spanish Search in French Search in Italian Search in Portuguese Search in German Search in Russian Search in Chinese
Los Angeles
Clearwater FL Income Properties Property Search
Things to do in Clearwater Florida and Surrounding Areas
Realtor Client Recommendations
Updated: Thursday, August 13, 2020

What Should You Know About Vir...
The pandemic is still going on, despite most states being in some phase of their reopening p...

Tips To Make Your HOA Newslett...
Focus on Building Community. Get HOA members to become participants rather ...

Copyright ©2020Realty Times®. All Rights Reserved

GETTING A PEST INSPECTION BEFORE YOU LIST
In this time of volatility, it is important to take all the precautions that are being advised,...

How to Prepare for this Holiday Season!
Well, it’s official – the holiday season is here! Get ready for both small and...

Historic Clearwater Properties You May Not Know About
In this week’s article, we highlight some fantastic historic properties in the Clearwater...

When talking about selling Location is key, but don’t neglect Condition
It’s possible you’ve heard the common phrase in real estate that It’s...

Can't Confront Packing up to Move!
Can’t confront packing up to move? We have a few ideas to help make it a bit easier...

America's Fastest Growing Cities 2018
I hope everyone is having a good New Year, I know it can be quite hectic and it’s...

Grey or Not Grey, That is The Question!
  Clients have been asking me if grey colors are still the best color to paint...

Some Mistakes Sellers Make When Selling Their Home
Here we are more than halfway through October and the real estate market is continuing...

What is great about living and/or moving to Florida?
By Terri Novitsky Broker/Realtor   Tampa, St. Pete, Clearwater Florida...

Things to do This Labor Day Weekend
The Downtown Clearwater Merchants Association presents Downtown Clearwater Art Walk Friday...

Clearwater FL Local Lifestyle
Clearwater FL Schools
What is my home worth
Lauren Michaels Real Estate Partners Mortgage Center
Resource Center
Lauren Michaels Real Estate Partners Client Login
Real Estate New Listing Email Alerts
Bookmark This Site