Should You Be Worried if Your Mortgage Is Sold?

has your mortgage been sold?

You open your mail and you receive a (another?) notice that the mortgage for your home has been sold to another financial institution. You know to send your monthly payment to another address and your mortgage statements now come from a different company. But should you be worried?

The process of applying for and maintaining payments on a mortgage can be complex — primarily because of what happens behind the scenes. To make it even more confusing, the company that originally lent you the money to buy your new home will likely sell your mortgage to an investor. This is called the secondary mortgage market.

What’s the secondary mortgage market?

This is where investors — such as Freddie Mac, Fannie Mae, pension funds, hedge funds, other mortgage companies, and banks, for example — purchase assets or loans, including mortgages, as well as the bonds that finance these assets.

While lenders tend to hold high-balance loans in their portfolio, they usually sell most mortgages because that’s the easiest way a lender can generate cash to make new mortgages. Without the secondary mortgage market, lenders wouldn’t be able to originate as many mortgages as they do.

Investors like snapping up mortgages because they’re backed by a tangible asset that you can see and touch, and that builds value over time — your home. Generally, house values go up, but in the event that they don’t and a borrower defaults, the equity in the home, or your down payment, is intended to cover this loss. This is why most lenders restrict a mortgage’s loan-to-value ratio, or LTV, to 80% of the house value.

Does this sale affect me, the borrower?

Yes, and it starts at the application process. But you shouldn’t be worried; it’s nothing you haven’t probably already heard about, especially if you’re been doing your homework. (And law protects you from abuses by the new owner of your loan).

For a lender to be able to sell in the secondary mortgage market, the loans need to meet the requirements of the investor buying them; it makes sense that investors are willing to pay more for higher-quality mortgages.

In essence, mortgages are underwritten so that they can be sold for the best possible price. This is why underwriting guidelines can be strict and why lenders want to see proof of employment and income to make sure you can afford to repay the loan without stretching your budget.

The interest rate you’re offered also reflects the price that investors will pay for your mortgage — and lenders use all kinds of info such as credit score and debt-to-income ratios to determine your overall mortgage-worthiness (read: likelihood of repayment). It’s easier to sell a mortgage in the secondary market when an investor is confident the borrower is unlikely to default.

What happens to borrowers who can’t repay?

The Consumer Financial Protection Bureau (CFPB) works to protect someone who is struggling to pay the mortgage. Even though a new company now owns the loan, this company still has to follow standards to collect on a delinquent mortgage. To prevent servicer abuses, servicers are required to reach out to borrowers to help them solve the problem through options such as a loan modification or short sale before foreclosing on a loan. Servicers are also required to inform borrowers about interest rate changes and balances, for example, so that there are no surprises.

Will the terms change once my mortgage is sold?

Mortgages can be modified, but not unless the borrower and lender both agree on the new terms. The Real Estate Settlement Procedures Act, which also is enforced by the CFPB, prohibits lenders and servicers, as well as any subsequent companies that own your loan, from changing the terms of your mortgage without your consent.

Unless you ask that the interest rate or another term on the note be changed and the lender or new owner agrees, or you agree to a change the lender or new owner proposes, the new owner of your mortgage can’t make any changes.

Still confused?

Call or text me, Lucy Garber, at (310) 293-4866. With over 20 years in the real estate industry, I understand how real estate financing works.

11 Ways to Create a Welcoming Front Entrance for Under $100

11 Ways to Create a Welcoming Front Entrance for Under $100

Whether you are getting ready to sell your South Bay home, or you just want to love coming home, wouldn’t it be nice to approach your home’s entrance with a grin instead of a grimace? Take our tips for beating a clear, safe, and stylish path to your front door.

First impressions count — not just for your friends, relatives, and the UPS guy, but for yourself. Whether it’s on an urban stoop or a Victorian front porch, your front door and the area leading up to it should extend a warm welcome to all comers — and needn’t cost a bundle.

Here’s what you can do to make welcoming happen on a budget.

1. Clear the way for curb appeal. The path to your front door should be at least 3′ wide so people can walk shoulder-to-shoulder, with an unobstructed view and no stumbling hazards. So get out those loppers and cut back any overhanging branches or encroaching shrubs.

2. Light the route. Landscape lighting makes it easy to get around at night. Solar-powered LED lights you can just stick in the ground, requiring no wiring, are surprisingly inexpensive. We found 8 packs for under $60.

3. Go glossy. Borrow inspiration from London’s lovely row houses, whose owners assert their individuality by painting their doors in high-gloss colors. The reflective sheen of a royal blue, deep green, crimson, or whatever color you like will ensure your house stands out from the pack.

4. Pretty up the view. A door with lots of glass is a plus for letting light into the front hall — but if you also want privacy and a bit of decor, check out decorative window film. It’s removable and re-positionable, and comes in innumerable styles and motifs. Pricing depends on size and design; many available for under $30.

A way to get the look of stained glass without doing custom work or buying a whole new door: Mount a decorative panel on the inside of the door behind an existing glass insert, $92 for an Arts and Crafts-style panel 20-inches-high by 11-inches-wide.

5. Replace door hardware. While you’re at it, polish up the handle on the big front door. Or better yet, replace it with a shiny new brass lockset with a secure deadbolt. Available for about $60.

6. Please knock. Doorbells may be the norm, but a hefty knocker is a classic that will never run out of battery life, and another opportunity to express yourself (whatever your favorite animal or insect is, there’s a door-knocker in its image).

7. Ever-greenery. Boxwoods are always tidy-looking, the definition of easy upkeep. A pair on either side of the door is traditional, but a singleton is good, too. About $25 at garden centers. In cold climates, make sure pots are frost-proof (polyethylene urns and boxes mimic terracotta and wood to perfection).

8. Numbers game. Is your house number clearly visible? That’s of prime importance if you want your guests to arrive and your pizza to be hot. Stick-on vinyl numbers in a variety of fonts make it easy, starting at about $4 per digit.

9. Foot traffic. A hardworking mat for wiping muddy feet is a must. A thick coir mat can be had at the hardware store for less than $20. Even fancier varieties can be found well under $50.

10. Go for the glow. Fumbling for keys in the dark isn’t fun. Consider doubling up on porch lights with a pair of lanterns, one on each side of the door, for symmetry and twice the illumination. Many mounted lights are available well under $100.

11. Snail mail. Mailboxes run the gamut from kitschy roadside novelties masquerading as dogs, fish, or what-have-you to sober black lockboxes mounted alongside the front door. Whichever way you go, make sure yours is standing or hanging straight, with a secure closure, and no dings or dents. The mail carrier will thank you.

For more tips about maintaining your house, getting it ready for sale, or how to be a prepared buyer, check back at my blog, or call me at (310) 293-4866.

Lucy Garber
Living in and selling homes in the South Bay for over 20 years
DRE 01100090
RE/MAX Execs Real Estate
LucyGarber1@yahoo.com
LucyGarber.com

Torrance Water Conservation – Level 2 Regulations

water-hose-lawn-restrictionsTo meet the statewide mandate, the city of Torrance and California Water Service Co. adopt much stricter provisions to cut water usage. The cuts are intended to help slash water usage statewide by 25 percent.

On May 5, 2015, the Torrance City Council approved activation of Level 2 water requirements due to the severity of the drought and to meet the new state regulations. This measure includes limiting sprinkler use on landscaping to 10 minutes between 6 p.m. and 8 a.m. two days a week, fixing leaks within four days, and restricting the refilling of ponds and pools.

Torrance residents reached only a 5 percent reduction from June 2014 through February.

Torrance Water Conservation Ordinance
Level 2 -Water Use Requirements and Regulations
Calls for up to 30 percent water use reduction

  • No outside watering from 8 a.m. to 6 p.m.
  • Outdoor watering limited to two days a week for 10 minutes per area or irrigation station
  • Fix all leaks within four days
  • No watering 48 hours after rain event
  • Certain restrictions on filling and refilling of pools, spas and ponds
  • Provides for administrative rules to implement the ordinance
  • Permanent Requirements In Effect at all Times
  • No excessive runoff from outdoor watering
  • No washing of exterior surfaces
  • No washing of vehicles with “open hose”
  • All water features must have a re-circulating system
  • Restaurants to use water conserving spray valves
  • Restaurants to serve water only upon request
  • Lodging business must provide option not to launder linens daily

Remember the 2-6-8-10 Plan
2 Days a week
6 PM – 8 AM Watering Times
10 Minutes/area (watering station)

Cal Water serves Redondo Beach, Hermosa Beach, Carson and portions of Torrance, with cuts of 16 to 20 percent are targeted.

Source: Daily Breeze and City of Torrance website.