Many people hear about the situation of selling “bad” loans by banks, but there is not enough information to sell good loans. Consumer loans are easier to sell since such transactions are simple. It is more difficult with a mortgage when in addition to the debt, the contract includes the subject of collateral. Most often, banks sell mortgages, thereby clearing their portfolio and reducing the size of reserves.
A respectable borrower who has fulfilled his dreams of improving housing conditions immediately begins to panic when he receives a notification about the transfer of his mortgage to another bank. It should be noted that the transfer is made only between banks. Other private companies are not yet able to buy mortgages. Many borrowers do not understand what will change after the sale of his mortgage, how to pay for the loan, whether the new lender will leave without housing.
Can a bank sell a mortgage on a loan?
Let’s start with the fact that the bank has the right to sell not only “bad debts”, but also good ones to other credit organizations. Additional consent of the borrower is not required for all this. Usually, the point of consent to transfer the debt is written in the contract. You can argue with the bank at the time of signing the contract and ask to delete this paragraph, but, as practice shows, banks do not agree to make changes to standard contracts.
After the transfer of mortgage rights, the new lender receives the client’s personal data and is responsible for their safety and non-disclosure.
The bank may assign its mortgage claims to any third party if the agreement does not prohibit the assignment (usually standard forms always contain this clause). The rights to claim the debt are transferred to the new mortgagee, and payment is made in his favor.
When choosing a bank for a mortgage, many are guided by the rate: the lower, the better. It would be nice to study the ratings, reputation, and territoriality, so as not to find out later about the transfer of debt.
What should I do if the mortgage is sold?
First, you should examine your mortgage agreement for the presence of a clause on the transfer of debt. In most cases, it can be found. Try to calm down because there will be no changes to the contract. Only the payment recipient will change.
As soon as it became known about the sale of the mortgage, you should visit the branch of your former bank and ask for a notification of this (if it was not received by registered mail), as well as take new details and clarify about payment methods.
Next, you should visit the branch of the new lender, ask about possible ways to repay the debt, and choose the most convenient option for yourself. If necessary, you can order a card and write an application for debiting the monthly payment from it. It will be convenient to make deposits at ATMs/terminals. You can also connect an online merchant profile to track receipts and debits.
To avoid trouble, you should inform the bank of all changes, especially contacts for communication. In this case, the bank will be able to notify you of all changes in a timely manner, including the transfer of the mortgage. This will help you avoid delays (even if the transfer was not canceled) and maintain a positive credit history.