You just received a letter saying your mortgage was sold to another company. Your heart drops. Did you do something wrong? Is your interest rate about to skyrocket?
Take a deep breath. Your mortgage being sold is completely normal, happens to millions of homeowners every year, and changes almost nothing about your loan. Let me explain exactly why this happens and what it means for you.
The Simple Answer: It's About Money Flow
Mortgage companies sell loans for one primary reason: to free up capital so they can lend to more borrowers.
Think of it this way. When Flagstone Mortgage or any lender gives you a $300,000 loan, that money is now tied up for 15 to 30 years. Instead of waiting decades for you to pay it back, lenders sell that loan to investors and immediately get their money back. This lets them turn around and help the next family buy their home.
This constant flow of money keeps the housing market moving. Without loan sales, far fewer people could get mortgages because lenders would run out of available funds.
The Secondary Mortgage Market Makes It All Possible
Your mortgage isn't just a loan. It's also a financial asset that can be bought and sold, much like a stock or bond.
Welcome to the secondary mortgage market, a $7.7 trillion industry where mortgages are packaged together and sold to investors. Government-backed entities like Fannie Mae and Freddie Mac buy most of these loans, along with institutional investors like pension funds and mutual funds.
These investors want the steady, predictable income that mortgage payments provide. You make your payment every month, and that money flows to whoever owns your loan. It's a win for everyone: lenders get immediate capital, investors get reliable returns, and you get access to affordable home financing.
Not All Lenders Can Handle Loan Servicing
Here's something most homeowners don't know: originating a mortgage and servicing a mortgage are two completely different businesses.
Loan servicing means handling the day-to-day management of your mortgage. Processing payments. Managing escrow accounts. Sending annual tax forms. Handling modification requests. Following constantly changing federal and state regulations.
Many mortgage originators simply aren't equipped for this administrative burden. The compliance requirements are extensive. The technology infrastructure is expensive. The legal liability is significant.
So these lenders do what they do best (originate great loans) and sell the servicing rights to companies that specialize in loan servicing. Some large servicers like Mr. Cooper handle millions of loans because that's their core business.
What Actually Changes When Your Loan Is Sold
Let's be crystal clear about this: when your mortgage is sold, almost nothing changes.
Your interest rate stays exactly the same. Your monthly payment amount stays the same. Your loan balance stays the same. Your repayment term stays the same. Every single term in your original loan documents remains locked in place.
Federal law protects you here. The new owner cannot change any terms of your mortgage. They bought your loan with all its existing conditions, and they're legally bound to honor them.
What does change? Three things:
- Where you send your payment (new address or online portal)
- Who you call with questions (new customer service number)
- Your loan servicer's name on statements
That's it. Your actual mortgage obligation remains identical.
Your Rights Are Protected by Federal Law
The Real Estate Settlement Procedures Act (RESPA) gives you specific protections when your mortgage is sold.
Your current lender must notify you at least 15 days before the transfer takes effect. The new servicer then has 30 days to send you their contact information, including where to send payments.
There's also a 60-day grace period after the transfer. If you accidentally send a payment to your old servicer during this window, you cannot be charged a late fee or have it reported to credit bureaus as a late payment.
If you spot any errors in how your new servicer is handling your loan, they must acknowledge your written complaint within five days and provide a resolution within 30 days.
Can You Stop Your Mortgage From Being Sold?
Unfortunately, no. When you signed your mortgage documents, you agreed to language that allows the lender to sell your loan. This is standard across the industry and backed by federal law.
However, you do have options if keeping the same servicer matters to you.
Some lenders are known as "portfolio lenders" because they keep loans on their own books rather than selling them. Regional banks and credit unions are more likely to retain loans than large national lenders. Pennymac and Guild Mortgage also service most of the loans they originate.
Ask potential lenders about their loan retention practices before you choose who to work with. While no lender can guarantee they'll never sell your mortgage, some are far more likely to keep it than others.
What You Should Do When You Get the Notice
Don't panic. This is routine. But do take these practical steps:
Read both notices carefully. Your old servicer and new servicer will both send you letters. Compare them to make sure all information matches.
Update your payment method immediately. If you autopay from your bank account, update the routing information. If you mail checks, note the new address. If you pay online, bookmark the new portal.
Verify the first payment. After making your first payment to the new servicer, call to confirm they received it and applied it correctly.
Check your loan details. When you get your first statement from the new servicer, review everything. Confirm your loan balance, interest rate, and escrow amounts are accurate.
Watch for scams. Unfortunately, scammers know mortgage transfers create confusion. If you're unsure whether a notice is legitimate, call your old servicer directly using the number on your original documents.