Your Loan Payments Are Unchanged
Even though your mortgage was sold to Freddie Mac, there is no change to the way you make your mortgage payment. You must continue to send your payments to the company listed on your mortgage statement.
Having a sold loan means that the lender has sold the rights to service the loan (i.e. collect the monthly principal and interest payments.) Everything about the loan remains the same except for the address the mortgage payments will be sent to. There are multiple reasons why mortgage lenders sell loans.
A transfer or sale of your mortgage loan should not affect you. “A lender cannot change the terms, balance or interest rate of the loan from those set forth in the documents you originally signed. The payment amount should not just change, either. And it should have no impact on your credit score,” says Whitman.
Liquidity. Freddie Mac buys home mortgages, primarily from smaller banks, credit unions and other lenders. In doing so, Freddie Mac keeps its lender network liquid so it can continue making loans. This has proven key to keeping the mortgage industry in continuous operation.
Both Fannie Mae and Freddie Mac are nationally recognized, federally backed mortgage institutions committed to providing the U.S. housing market with liquidity, stability and affordability. This mission for both government-sponsored enterprises, or GSEs, is crucial to the nation's housing finance system.
What does Freddie Mac do? Freddie Mac was chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing. Our statutory mission is to provide liquidity, stability and affordability to the U.S. housing market.
Can you stop your mortgage from being sold? No, you do not have the ability to stop your mortgage from being sold.
By purchasing mortgages, Fannie Mae and Freddie Mac enable lenders to make more loans. With more lending money available, consumers keep buying homes, and the real estate market stays afloat. In addition, these companies take worldwide investor money and place it into the US housing market.
The answer is fairly straightforward. Lenders typically sell loans for two reasons. The first is to free up capital that can be used to make loans to other borrowers. The other is to generate cash by selling the loan to another bank while retaining the right to service the loan.
It's very common for mortgage loans to be sold, and it's not a cause for alarm. You should receive notice in the mail both before and after the sale takes place.
When a borrower purchases a property by "assuming" the seller's original mortgage loan and takes over the loan on the existing terms of payment it is called a "loan assumption." When another lender buys a mortgage loan, it is a "loan assignment."
Frequently asked questions about Fannie Mae and Freddie Mac
Is Fannie Mae the FHA? No. The Federal Housing Administration is a government agency that insures loans made by lenders to borrowers with low to moderate incomes.
You can look up who owns your mortgage online, call, or send a written request to your servicer asking who owns your mortgage. The servicer has an obligation to provide you, to the best of its knowledge, the name, address, and telephone number of who owns your loan.
Conventional loans include both conforming and non-conforming loans. A conforming loan meets the guidelines of Freddie Mac and Fannie Mae. These are government-sponsored enterprises—private companies that were started by the government.
Differences between Fannie Mae and Freddie Mac
Although both buy mortgages, they purchase the loans from different sources. In general, Fannie Mae tends to buy loans from larger commercial banks and lenders, whereas Freddie Mac often buys loans from smaller banks.
Fannie Mae and Freddie Mac buy mortgages from lenders and either hold these mortgages in their portfolios or package the loans into mortgage-backed securities (MBS) that may be sold. Lenders use the cash raised by selling mortgages to the Enterprises to engage in further lending.
The names, however, are simply described by both companies as creative spins on the acronyms for their original names -- the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).
Selling your home in a short sale will cause your credit to drop significantly — up to 160 points, depending on where your score was at the time it hits your reports.
Transfer of mortgage is a transaction where either the borrower or lender assigns an existing mortgage (a loan to purchase a property—usually a residential one—using the property as collateral) from the current holder to another person or entity.
If there's a shortage in your account because of a tax increase, your lender will cover the shortage until your next escrow analysis. When your analysis takes place, your monthly payment will go up in order to cover the time you were short and to cover the increased tax payment going forward.
An accounting scandal erupted at the government-sponsored company in June 2003 when it disclosed that it had misstated earnings by some $5 billion — mostly underreported — for 2000-2002 to smooth quarterly volatility in earnings and meet Wall Street expectations.
The Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Freddie Mac, is a publicly traded, government-sponsored enterprise (GSE), headquartered in Tysons Corner, Virginia.