You’ve just closed on your mortgage, and then a surprising letter arrives: your loan has been sold to another company. Can my lender sell my mortgage? Is this legal? Why does it happen? Let’s break it down.

Why Lenders Sell Mortgages

When you take out a mortgage, the lender originates the loan, meaning they handle your application, approval, and funding. While some lenders keep the loan and collect payments themselves, most lenders sell mortgages shortly after closing.

Why? Holding onto a 15- or 30-year loan ties up too much capital. Instead, lenders often sell loans to free up funds and issue more mortgages. They still earn from origination fees, discount points, and closing costs before moving the loan off their books.

Who Buys Mortgage Loans?

Mortgage loans are commonly sold to large investment companies or government-backed entities like Fannie Mae and Freddie Mac. These institutions bundle thousands of home loans into mortgage-backed securities (MBS), which are then sold to investors.

Investors earn returns from your monthly mortgage payments, making MBS a stable, asset-backed investment. This system fuels liquidity in the mortgage market and reduces risk for lenders.

What Changes If My Mortgage Is Sold?

If your mortgage is sold, your interest rate, loan term, balance, and monthly payment remain the same. The terms of your original agreement do not change.

What does change is who services your loan—the company you send payments to and contact for questions or issues.

What to Expect When Your Loan Is Sold

By law, your lender must notify you at least 15 days before the sale. The new loan servicer must notify you within 30 days after acquiring the loan, providing their name, contact information, and payment instructions.

From that point on, you’ll submit your monthly payments to the new servicer—either by check, online portal, or automatic transfer.

How to Protect Yourself During a Loan Transfer

• Keep all documentation related to your mortgage, including sale notifications and your most recent statements.
• Track your payments during the transition period to ensure they’re credited properly.
• Confirm the legitimacy of any communication regarding your mortgage to avoid scams.
• Contact your original lender or new servicer if you have questions or need clarification.

Final Thoughts

Yes, your lender can legally sell your mortgage—and in most cases, it’s a routine and harmless part of the lending process. The key takeaway is that your loan terms won’t change, but you should stay informed and organized during the transition to ensure everything runs smoothly.

Have questions about your mortgage or need guidance on your home loan options?
Contact Mortgage Capital today—we’re here to help.