We research, you save.

Who owns my mortgage?

By   |  Posted in Ask The Expert

Q: Dear Mr. Gumbinger: Who owns my mortgage and why does someone else service the loan?

I was told by Fannie Mae over the phone that they own my loan. When I went into the loan lookup it said Fannie Mae does not find a match, therefore, they do not own the loan. How can this be? This has happened many times over.

I have been told by my servicer that both Wells Fargo and Citibank own the loan. Something is wrong.

A: The owner of the loan is most often the "investor" -- the entity who put up the actual funds to make your mortgage happen. This may be the original party for your transaction, such as a bank, but loans (like other investments) are bought and sold between parties, so the owner can change from time to time and could be anyone from a pension fund to a real estate investment trust (REIT) or other entity (you might actually be a part owner of certain mortgage loans in any bond mutual funds investments you hold, for example).

That said, the servicer is usually a separate entity, whose responsibility is to collect the monthly payment from you, maintain escrow accounts, and distribute those funds to other parties (local tax authorities, insurers and to the owner of the loan). For many lenders, this is beyond their capabilities or business model, and so these "servicing rights" are actually sold to other entities that make a living providing these services to loan owners and homeowners.

Some large mortgage lenders do their own servicing for their own loans and since they have the capacity, may also do servicing for other investors, too.  There are also specialty "subservicers" who may be contracted for specific tasks (loan workouts, modifications, etc.) on behalf of the actual servicer.

In many cases, a large lender may be the servicing entity for large investors or guarantors of loans, like Fannie Mae or Freddie Mac. They may have even originated your loan, and since your contact would be with this entity, and all your paperwork/statements/correspondence would come from them, you might come to believe that they actually own your loan, when in reality they may have long ago sold the actual mortgage to another party but retained the servicing rights.

If Fannie Mae or Freddie Mac owns or guarantees your loan, you should be able to determine this by using the loan lookup tool at www.makinghomeaffordable.gov. If you're not there, there is also a list of lender contacts, so that you can contact your mortgage holder directly.

If you have a specific complaint you are trying to resolve with your servicer, the Consumer Finance Protection Bureau welcomes and openly solicits for these kinds of queries and does follow up on them -- you can find a complaint form and learn more about your rights and obligations at http://www.consumerfinance.gov.

About the author:
A 25-year expert observer of the mortgage and consumer debt markets, Keith Gumbinger has been cited in thousands of articles covering a wide range of consumer finance and economic topics in outlets ranging from the Wall Street Journal to the Bottom Line newsletters. He has been a featured guest on national broadcasts for CNN, CNBC, ABC, CBS and NBC television networks and has been heard on NPR and other national and local radio programs. Keith is the primary researcher and writer for HSH.com's MarketTrends newsletter and has authored or co-authored a number of consumer guides on mortgages, home equity, refinancing and more.

More help from HSH.com