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Can a lender sell my loan?

Most loan documents have a servicing disclosure notice which states the typical percentage of the loans that they sell after the loan closes. However, when the loan is sold, the original terms of the loan stays the same and does not change.

There is a difference between a lender selling the mortgage and selling the servicing right. Loan servicing refers to billing the homeowner, applying payments, and maintaining the escrow account for property tax and homeowner insurance.

A bank can sell a loan to investors in the secondary market and retain the loan servicing right. In which case payments are still made to the bank, and the homeowner probably never realize that the mortgage has been sold. A bank can also sell the loan servicing right. In this case monthly payments are usually paid to the new bank that now services the home loan. Some loans are bought and sold several times throughout the loan term.

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