Why do mortgage companies resell your account so frequently?
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I purchased my home in Feb 06 through Option One Mortgage Company. In less than 4 months I received a letter stating that they have transeferred the servicing of my loan to Americas Servicing Company. I later asked several other homeowners and did some online searching and realized it is extremely common. Why?
Why do mortgage companies resell your account so frequently?Many mortgage companies are really more in the business of initiating the loan. They only have a limited amount of capital, so they sell the loans to other companies, who are more into mortgages as an investment. After the sale, the initiating company has the money to loan out to the next borrower.
Why do mortgage companies resell your account so frequently?This is done for a number of reasons. Bad credit risks are taken off the books quickly. Other reasons would be they sell morgages so they can buy more morgages. It works like this: You get a 30 year morgage at 6 1/2% --- the fed rases rates to 8 1/2 % --- your morgage company sells the morgages Fanny Mae or Freddie Mac getting back the principle plus three years in interest. Then they take that money and give out more morgages at the new 8 1/2 % rate, thus making money on you and money on the new morgage.
Why do mortgage companies resell your account so frequently?Money today is worth more than the same amount of money will be worth tomorrow.
If a bank can liquidate some of its mortgages to another company and get the money out of them sooner, it can turn around and re-invest that money into a different venture that has a higher rate of return. This way they can maximize thier profits.
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