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Not Only Can Your Bank Sell Your Mortgage, but You Gave It Permission to Do So.

When you visit your bank, you see all those cheery people in those posters that line the walls with sayings like, "Let us be your home loan lender!" or "You're our customer and our Number i priority!" or some such.

Because you have your checking account, your savings account, your auto loan, and probably a credit card at your bank, you feel comfortable there. After all, your bank is your friend, right? At least, that's what the posters say.

So you decide to get a home loan from your bank. You move in, and then a few weeks later, you get a notice saying, "Your Bank has just sold your loan to Big Mortgage Company. Thank you for letting us serve you."

This comes as a surprise to most consumers. They didn't know that this could happen. Consumers can feel let down or even lied to when their bank sells their home loan. After all, if you wanted your mortgage to be from Big Mortgage Company, you would have applied there in the first place, right? Of course you would.

But guess what? You did know about it. At least, you signed a piece of paper claiming that you knew about it. How's that? Surprised?

Federal law requires mortgage companies to disclose two things to you regarding selling your loan:

1. Whether or not your loan will be sold

2. What percentage of the loans that your lender issues will be sold

Trust me. You signed this. I fully understand that you signed maybe 20 documents of various types when you applied for a home loan, but this is one that you signed. The problem with these disclosures is that consumers may not be aware of what exactly is going on, primarily because of the language used to tell the borrower that the loan could be sold.

The obscure term that is used is "servicing rights." A loan servicer is the organization that you send your payments to, and the form you signed is called the servicing disclosure. Your potential lender is required to tell you what percentage of its loans it sold last year to other investors. This is usually done by checking a box, such as 0-25%, 26-50%, 51-75%, or 76-100%.

So should you feel betrayed because your bank sold your loan to someone else? You could. In fact, when your bank sells your loan suddenly, there might be some other unexpected consequences that you didn't count on.

 
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