Why are banks selling mortgages?
Many homeowners are finding themselves submitting loan modification applications and even beginning their trial modification payments, only to discover that their bank has sold their mortgage. If a loan is sold any offer received from the bank is no longer valid.
Banks selling mortgages over to servicers, which are companies dedicated to collecting payments on mortgages, has been customary for quite some time. While it generally doesn’t complicate loans, there is an overwhelming number of homeowners in the process of working out a loan modification, refinance, or other agreement. When these mortgages are transferred to the servicer, the agreement that the original bank made doesn’t carryover.
The servicers are supposed to contact homeowners that are either in pre-foreclosure or in the foreclosure process to assist the homeowner, much in the same way the banks have a duty to avert foreclosure. Unfortunately, the transfer of the loan complicates the matter by several-fold. The servicers are processing more loans than they’re able to handle, due to the rapid incline in new mortgages being processed by banks; they are selling loans to servicers just as quickly. One of the largest servicers, Ocwen, now holds 17 percent of the mortgage servicing market, compared to 3 percent in 2010.
When servicers convert bulk mortgages to their database, the computers aren’t accurately categorizing the loans. For example, when you speak to your bank about foreclosure alternatives, they have selections that are applicable, such as loss of an income, death in the family, severe home damage, and the list goes on. These categories help them keep track of which foreclosure alternatives are best suited for the individual homeowner.
One of the biggest issues that homeowners in this situation faces is having to resubmit their loan modification application. Even more frightening is that while the servicer is trying to sort out all of the loans, the foreclosure continues to move forward if it’s not defended by a foreclosure attorney.
There isn’t any way to prevent your loan from being sold to a servicer, but we can assist in submitting the loan modification paperwork efficiently, thus speeding up the modification process. If you’re finding it difficult to have your application approved by the bank, make an appointment with our office so that we may discuss how we can help.