My mortgage was sold to a company I dislike

[RawDepth]

A few months ago I won a legal battle against a major loan company. It involved them refusing to refund fees for services that they never provided. (This was not in connection with my mortgage, but another matter.)

Anyway, it is finally over. Whew! I got my money back the hard way and have washed my hands of them. I never want to deal with them again.

Next I receive a letter informing me that the very same company has just purchased my existing mortgage. (Again, just coincidence.)

Wait a damn minute! Don't I get a say in this? What if I don't want to deal with this company?

[Gidge]

no you dont have a say..i wouldnt give it a second thought...

[legionserial]

Why was your mortgage sold?

[Gidge]

Originally Posted by legionserial

Why was your mortgage sold?

its a fairly common thing in that industry..

[gcapel]

My loan was just sold last month. I guess it is what you get when you don't use a local inhouse lender. The main factor was the low fixed rate. I signed on @ 5.3% 30 years vs 6.5%. I just want to make sure the numbers jive in the transition.

[c7sus]

Where have you been for the last 5 years???

Look around, there's only like 3 banks left, so it's not like there's a lot to choose from anyways.

[Atom Bomb]

..or..

Move to Canada?

We got hardtimes but not that bad. Holy crap.

Intresting how the powers that be can buy and sell lively hoods with no say fro mthe lives they effect.

In the end were all just a piece of paper.

[legionserial]

Originally Posted by Gidge

its a fairly common thing in that industry..

Wow. I've not known of that sort of thing happening over here unless you aren't keeping up with your repayments.

[RawDepth]

Originally Posted by legionserial

Wow. I've not known of that sort of thing happening over here unless you aren't keeping up with your repayments.

Nope, it has nothing to do with payment history. I've never been late. And my mortgage is about 4 years old.

It works like this...

If Company "A" owns my mortgage, it will get profit from the interest that I pay each month. However, it takes them 30 years to get it all.

If they sell the mortgage to Company "B" they get less than the full-term interest would bring, but they do get some profit all at once. Now Company "B" can collect the remaining full-term profit which is more than they invested.

It's a win/win deal for both companies.

Nothing changes for the homeowner except for the address where the payments go. By law the terms of the original loan must remain unchanged.

When I called my original lender to discuss the most recent payment, they told me that they sold 32,000 home loans all at once.

[The Ghost of FM]

Originally Posted by RawDepth

Nope, it has nothing to do with payment history. I've never been late. And my mortgage is about 4 years old.

It works like this...

If Company "A" owns my mortgage, it will get profit from the interest that I pay each month. However, it takes them 30 years to get it all.

If they sell the mortgage to Company "B" they get less than the full-term interest would bring, but they do get some profit all at once. Now Company "B" can collect the remaining full-term profit which is more than they invested.

It's a win/win deal for both companies.

Nothing changes for the homeowner except for the address where the payments go. By law the terms of the original loan must remain unchanged.

When I called my original lender to discuss the most recent payment, they told me that they sold 32,000 home loans all at once.

I wonder why they do things like that?

I know you explained that it's a fast payoff for them but what the hell do they need that much money for? It's not like banks are readily giving out loans like they used to for homes and businesses like they used to? They just seem to be hoarding it and creating junk mortgage bonds that they pawn off to other banks, like they fear that everyone's gonna default on their payments real soon and they want to wash their hands of the stuff before the crap hits the fan.

I thought part of the tarp plan was to cut down on this kind of crap? Seems like all it did was put even more money into the hands of bankers who aren't actually playing ball with it.

Or am I way off base with that?

Cheers!

[Jeff_D]

Originally Posted by RawDepth

A few months ago I won a legal battle against a major loan company. It involved them refusing to refund fees for services that they never provided. (This was not in connection with my mortgage, but another matter.)

Anyway, it is finally over. Whew! I got my money back the hard way and have washed my hands of them. I never want to deal with them again.

Next I receive a letter informing me that the very same company has just purchased my existing mortgage. (Again, just coincidence.)

Wait a damn minute! Don't I get a say in this? What if I don't want to deal with this company?

That sucks. Shop around and see if you can refinance with another company. Otherwise, sounds like you're stuck with em.

[RawDepth]

Originally Posted by Jeff_D

That sucks. Shop around and see if you can refinance with another company. Otherwise, sounds like you're stuck with em.

No way! Refinancing is the worst thing a homeowner can do unless they intend to stay in the home for many years. And I don't plan to stay in mine any more than maybe another 5 or 6 years. (10 years was my original plan.) So that would cause a huge loss for me. No thanks, I'll stay with my old 6% mortgage.

[Gidge]

Originally Posted by RawDepth

No way! Refinancing is the worst thing a homeowner can do unless they intend to stay in the home for many years. And I don't plan to stay in mine any more than maybe another 5 or 6 years. (10 years was my original plan.) So that would cause a huge loss for me. No thanks, I'll stay with my old 6% mortgage.

actually you could save some $$$ if you snag the right finance company with reasonable closing costs...

Im seeing 4.25% interest rates right now..for every $100,000 in balance, a 1.75% change means $1750 in savings...

[RawDepth]

Originally Posted by Gidge

actually you could save some $$$ if you snag the right finance company with reasonable closing costs...

Im seeing 4.25% interest rates right now..for every $100,000 in balance, a 1.75% change means $1750 in savings...

I recently met with my credit union and with a major loan company to discuss a refi. That's when I figured out the following.

The better deal of the two had the closing costs at over $8000. They can roll it into the loan as long as the property value is up high enough. For purposes of discussion let us assume that my current loan balance is $100,000 and I have no money for closing.

My new loan amount will be $108,000. Since my savings will be $1750 per year (as you have shown above) it will take 4.6 years just to pay off the closing costs. In other words, during that 4.6 years I spent $8000 and I saved $8000. It's a wash. So 4.6 years from now (when I want to sell the home) my loan balance will still be at $100,000. This is ignoring the fact that I had to start over again on the amortization table, so a smaller portion of each monthly payment actually earns loan equity. The real loan balance may be higher than $100,000 after 4.6 years.

If I keep my current loan, my balance will be closer to $90,000 in 4.6 years. How will I save money with the refi?

[Gidge]

Originally Posted by RawDepth

I recently met with my credit union and with a major loan company to discuss a refi. That's when I figured out the following.

The better deal of the two had the closing costs at over $8000. They can roll it into the loan as long as the property value is up high enough. For purposes of discussion let us assume that my current loan balance is $100,000 and I have no money for closing.

My new loan amount will be $108,000. Since my savings will be $1750 per year (as you have shown above) it will take 4.6 years just to pay off the closing costs. In other words, during that 4.6 years I spent $8000 and I saved $8000. It's a wash. So 4.6 years from now (when I want to sell the home) my loan balance will still be at $100,000. This is ignoring the fact that I had to start over again on the amortization table, so a smaller portion of each monthly payment actually earns loan equity. The real loan balance may be higher than $100,000 after 4.6 years.

If I keep my current loan, my balance will be closer to $90,000 in 4.6 years. How will I save money with the refi?

$8000 in closing costs on a re-fi is rape...

[antichef]

Yeah - the mortgage is pretty much a security that one person (bank) can sell to another - I bet if you read your promissory note it'll be covered in there. That's how those morons were able to construct those derivative securities that blew up in their faces.

That sucks. On my last house, "my" (checking account) bank wound up buying my mortgage, and that was kind of cool, because it showed up in my online banking along with my other accounts. I did refinance that one to get a pretty big drop in the interest rate, and the closing costs weren't bad back then. 8k is a lot - if the math don't work, it's a bad idea, of course.

[RawDepth]

Much of those closing costs are third party fees that the bank cannot control. They can neither reduce them nor wave them. Things like Title Insurance, Title Insurance Endorsement, Lawyer Closing Fees, Recording Fees, Flood Check, Appraisal, all come from other people. If they tell you there are no closing costs, they are either lying to you or hiding them in there somewhere.

The bank itself adds on processing fees as well. They also wanted me to pay points to get the rate that low, (another waste of money if not staying in home long term.) To top it all off, I also must pay a huge funding fee to the V.A. for using my GI loan benefits. That is similar to points.

I add all of those things together and call it closing costs. It is really the total cost of getting the loan.

No matter how you slice it, a Refi will never save me more than $10,000 in only 5 years time. If you believe it can please lay it on the table for me.

[Gidge]

Originally Posted by RawDepth

No matter how you slice it, a Refi will never save me more than $10,000 in only 5 years time. If you believe it can please lay it on the table for me.

no thanks...

you want someone to take their time to try and convince you that $10,000 in your pocket is better than $10,000 to the banks?...

damn i wish this was the Cave..