Who owns your mortgage? What a dumb question – the bank owns my loan and their contact information is at the top of the bill I get each month! Sorry, wrong answer and one of the many reasons why the Foreclosure Process is so confusing. Read on and we’ll try to make it less confusing. Learn About all Your Foreclosure Options to Beat the Bank.
Initially, there’s an important distinction between loan servicing companies (the company that sends your monthly bill) and the company that actually owns your mortgage. Loan servicing companies are hired by the true owners of the loan to handle everything from billing and collecting monthly payments to filing foreclosure lawsuits when needed. What makes things even more complicated is that most loan servicing companies are owned by large banks and financial institutions which means you might get a letter from a division of Chase Bank as the servicing company for a loan owned by IndyMac, Deutsche Bank or others but not Chase! Is Your Mortgage Underwater?
Although usually owned by banks, these companies only make money if your foreclosure remains active so they generally have little or no incentive to settle your case. If the case is resolved and the foreclosure process ends, the loan servicing company loses out on the extra fees for handling collection matters on your account which makes finding the real owners even more essential. Given the huge numbers of mortgages in default, the actual owner of your loan likely has little or no information about your situation until you let them know directly.
Once you figure out who services your loan, the next issue is confirming who truly owns your note and mortgage and who has the right to sue you as a result of that ownership.
The easiest way to find out who owns your note and mortgage is asking the loan servicing company in writing for ownership documentation. Although you’re legally entitled to it, you may need to ask for it several times as they’re often unwilling to provide the information. If a Foreclosure Lawsuit has already started, make sure the banks produce paperwork confirming that they owned the note and mortgage at the time the lawsuit was filed and don’t just rely on what they’ve said in the lawsuit which may be entirely wrong. See our discussion on Foreclosure Defenses as well as our Sample Foreclosure Answer for help in getting this information from the bank and why they had to own the mortgage before the lawsuit was ever filed.
Surprisingly to many homeowners the current owner of your mortgage is almost never the original lender from your initial loan closing or the lender from your mortgage refinancing or home equity line of credit. Instead, after your loan closing most if not all of the original lenders sold your loan documents to Fannie Mae, Freddie Mac and others who then resold the mortgages to financial institutions on Wall Street. See How Mortgage Insurance Can Help Stop Foreclosure.
Bundles of thousands or more of these mortgages were then sold as shares of stock or bond offerings known as mortgage backed securities on the financial markets meaning your loan documents may have been sold several times and the ownership issue is muddled at best. Although many legal scholars disagree as to whether the stock or bond fund owns each underlying mortgage or whether the shareholders each own fractional interests of each mortgage, the prevailing notion is that the trustee for the bond or stock fund is the actual owner and therefore the only party who can legally make ownership decisions regarding your mortgage. Learn How Strategic Default Works.
What the confusion over who owns your mortgage means is twofold-the first is that figuring out who really owns your loan may be difficult and in some cases impossible. Secondly, ownership issues and who has the right to sue you may be a life saver or more accurately a home saver. As you’ll see from our discussion of Foreclosure Defenses, the failure to own the note and mortgage at the time the foreclosure lawsuit was filed or not providing the proper documentation to show how they actually became the owners of your mortgage and the right to sue you can result in dismissal of the foreclosure lawsuit and Saving Your Cave. Read More on How SavetheCave.com Can Help You Stop Foreclosure.