My Mortgage Company Sold My Loan, Now What?

Who Owns Your Mortgage

     Loans being sold happens every day in America and almost as quick as the docs are signed at the title company. According to Mark Thaler, with America’s Choice Home Loans (ACHLonline.com), the time it takes to sell a loan varies between investors but usually happens before the first payment is made. If it takes longer then the payment will be made to the originating company the first time and then the sale will go through. Your loan will probably be sold multiple times before you are done paying it off.

     There are several major players that purchase loans from originators. This is called the secondary market and consists of private investors, banks and the infamous Fannie Mae (The Federal National Mortgage Association), Ginnie Mae (The Government National Mortgage Association) and Freddie Mac ( The Federal Home Loan Mortgage Corporation.. Fannie Mae and Freddie Mac are government-sponsored entities while Ginnie Mae is still a government entity. In fact, Ginnie Mae’s securities are the only ones that are back by the full faith and credit of the United States government. I could go on and on about what these organizations do but Wikipedia has several great articles on each and that isn’t the focus of this entry.

      Suffice it to say that, there are a lot of players in the secondary market that can purchase your loan once it is originated. The good news is that if you have a fixed rate mortgage, no matter who buys it, your rate can not be increased by the entity that purchases your mortgage. If you have an Adjustable Rate Mortgage then the rates that you agreed to when you signed on the dotted lines are the rates that your new mortgage owner must abide by. To make things even more complicated, the entity that buys your mortgage may contract out the servicing of your mortgage to a third-party company. That means that you will deal with a third-party provider for all of your billing rather than with the company that owns your loan. Lost yet?

     The good news is that most of this is transparent and you won’t know it even happens until you see a different name on your billing statements. Just be glad that you were able to get, and maintain your payments on,  that mortgage that you despise so much because there are a quickly number of Americans who can’t.

     As usual, please feel free to comment or leave questions.

The Real Estate New Home Buyer’s Tax Credit

         

Buy a home add to your tax burden

Here is an issue that is at the forefront of conversation for anyone thinking about buying or selling a home these days. Will or Won’t Washington re-institute the tax credit. There seem to be a lot of opinions floating around out there, even in the press room at the White House. One person will say they are going to do it, one says they are giving serious thought and yet another will say it is a dead issue. I believe, this will be an issue that politics may decide with the upcoming elections. The need to spur the economy to gain some positive press may over-ride common sense.
          What/Who are you supposed to believe as a home owner/buyer? If you look at the National Association of Realtors 2010 Legislative and Regulatory Policy priorities you will not find any mention of the tax credit. What you will find on top of the agenda is the mortgage interest tax deduction, but that’s for another entry.

          According to the Joint Committee on Taxation, the estimates are that the three iterations of the tax credit may result in revenue losses to the federal government of about $22 billion through 2019 and the Internal Revenue Service said that through July 3, 1 million homeowners claimed $7.3 billion in interest-free loans through the first credit, which requires the amount to be repaid over time. About 2.3 million claimed a total of $16.2 billion through the two more recent credits that do not require payback as long as the homeowner remains in the home for more than three years. Texas was number two in the list of most money claimed by home owners at $1.39 Billion. Yes that is Billion with a “B.”

         So, where do we all stand? We know Washington hates to give away money; they are in the business of taking money in. All of that money that was grabbed by home buyers will be made up from our taxes. Now we ask ourselves should it be done again? My opinion is “No.” I don’t believe it would be good for the country as a whole or our future tax rates.

         Look at what happened this summer in our industry. It was one of the slowest summers in recent memory and I fully believe (and predicted) that the tax credit only moved buyers up in their timelines. A lot of those that were thinking about buying over  the summer jumped in April to take advantage of the tax credit, leaving fewer buyers in the months following. I personally would not want to see that kind of shift again. The market can take care of itself. In my opinion, what is holding us back right now is the tightening of the credit restrictions on lending. Once everyone involved gets that figured out then things will begin to move again. For now, the rental market is heated up and will stay that way for a bit longer. What do you think should be done and why?

Hello world!

Hello world! This is the beginning of the best real estate blog in the Houston / Katy metro area. I will be writing on everything from buyer and seller tutorials to advice on saving your home from foreclosure. In these pages there will be something that everyone can make use of. By everyone, I mean anyone from first time home buyers to the most seasoned investors. There will be information about communities, things to do, tutorials, guides, lists, photos from the area and events. I encourage all of you to subscribe to the RSS feed and follow along and to comment on anything you find relevant. I am looking forward to the conversation we are starting and to helping as many of my readers as I can in finding the answers they need.