When you’re looking to do a short sale, one of the first things to do is find out who owns your loan!
A short sale can be a very complex process, and every bank and investor has different programs and guidelines that they follow.
One of the best things you can do whether you are a homeowner in need of help on a short sale, or an agent trying to help a homeowner, is to understand the situation you are getting in to. One of the key pieces of this short sale puzzle is finding out who actually “owns” the loan, not just who services the loan.
To understand short sales you have to have some knowledge of the back end of the mortgage market to understand the process. A few years ago when the market was booming mortgages would be originated and then sold left and right between the big mortgage investors like Fannie Mae and Freddie Mac. In most cases you are dealing with a servicer such as Wells Fargo or Bank of America that may “service” the loan but they do not actually own the loan. It is not as common to deal with a servicer who actually owns the loan, meaning the bank who originally lent the money still owns it unless it is a small community or regional bank. The investor guidelines ultimately determine relocation money availability on the short sale, if there will be a debt release on the sale, and a slew of other details.
SO – how do you find out if Fannie Mae, Freddie Mac, FHA or another party owns your loan??
1. You can look on your mortgage statement. If the loan is FHA backed it will have an FHA MI line-item on your statement that usually says: “FHA insurance”. You can also look at your original deed of trust, as it will have your FHA case number on it. If you want to see if your property is owned by Fannie Mae or Freddie Mac, you can look it up directly under the loan look-up tools on their sites.
Fannie Mae: http://www.knowyouroptions.com/loanlookup
Freddie Mac: http://www.freddiemac.com/mymortgage/
2. If your loan is not owned by one of these three entities you can ask the servicer of the loan who owns it or you can research it through getting the title pulled. In some cases it could also be owned by the servicer, in this example Wells Fargo is the servicer and they are also the investor on the loan. This circumstance is called a “portfolio” loan.
The three biggest mortgage investors in the country are Fannie Mae, Freddie Mac, and FHA. VA is another big investor but does not have a portfolio as big as the three mentioned above. With the exception of FHA/VA because they insure their own loans-there could also be a mortgage insurer who provided insurance on the loan. The reason you need to understand this is you have to know that if there is a servicer, investor, and mortgage insurer on the loan all three of them have to agree to the terms of the short sale. It is very important to find out from the very beginning of the process which actual end-investor is on the loan. An FHA backed mortgage uses a totally different process when it comes to a short sale than does a Fannie Mae loan.
Every investor has a different set of guidelines they set forth for short sales and foreclosure procedures so you have to understand that ultimately it is up to the end-investor, not to the servicer. The servicer has their own guidelines but they do not make the final decision, and it is important that you know who the investor is because there will be times when you may have an issue with a servicer and you will have to go to the investor to get it resolved. There have been many transactions where the servicer and I disagreed on a particular issue and I contacted the investor and got an approval. So make sure you understand that going in to this situation you know everyone who is involved and go to the servicer and investor’s site to get familiar with their guidelines along with the servicer or investor specific documents that they may require. Also, on my third party authorization letter (the document that gives you permission to speak to the bank) I always include the investor as well as the servicer so that if later on I have to reach out to the investor I already have permission from the seller to do so. This also puts the servicer on alert that you know what you are doing and have already researched the identity of the end-investor. If you would like more information on this subject or you need help avoiding foreclosure feel free to contact me at any time.