Mortgage Sold 1 Month after Getting It?
 

OK, I did a re-fi with Citibank which was approved in April. I got a letter yesterday telling me it was sold to Freddie Mac.

I know mortgages are sold back and forth but in a month's time?

What gives?

Normal

Citibank intended to resell it when the wrote it

When I used to work in a mortgage company-we would have the buying investors(banks) calling us to inquire about the loan BEFORE it had even closed!! We usually told them to go to hell, of course, for that reason.

Explain to me how they make money.

I feel dirty and used.

Wait, I always feel that way.

Happened to me one refinance ago... Within about 45 days, we received a new booklet of payment stubs from a second mortgage company.

We just refinanced in the fall with Old National, $200 closing costs and dropped out APR to 3.9. I asked them if they were going to sell it "like last time" and they said they wouldn't. The margin of profit is almost nonexistent at that APR.

They're not making anything on the sale of one loan. It's packaged and then sold on the secondary market. Totally normal and you signed a disclosure at closing acknowledging this could happen. They usually tell you the percentage of likelihood that it will be sold.

I don't really care that it was sold. I'm trying to figure out how they make money.

Selling Mortgage Loans - Mortgage Banks, Depository Institutions

They make a small percentage right away, and have their money back to re-invest. In some cases, they also make money in initial closing costs.

Sounds to me like this sort of thing could bring down an entire banking system/economy that would then require a gov't bail out using money the gov't did not have and needed to print;)

Thanks for the input.

Because they're selling financial instruments? You understand that it happens ALL the time, in every possible way? And it happened for decades before the collapse

I had one loan sold 3 times. A lot of the time a bank will sell the loan but continue to service it. That's one way to make good money with nothing invested. You don't even know who has the pink slip.

That's why (almost) all mortgages use the same 35 page note. They can be bought and sold with the same terms. Has little to no effect on the mortgagee.

Making money by pushing risk around. What a great basis for our new economy.

Sad but true

By "new" do you mean "going on since Renaissance Italy?" :)

Our mortgage was sold several times in less than a year...

I thought it was funny that Bank of America sold mine to Banc of America.

Spelling change or real sale?

those agrarian and manufacturing economies that built our country were just passing fads, I have to agree. ;)