Who Owns My Mortgage?

Interesting question, and one that is coming more in to focus as each day passes.  Under the current structure, the answer is probably you and a lot of your neighbors.  If you invest in a 401(K) or 403(b) plan, one of your investment selections is “government” or “bond” funds.  If you read the investment structure of those funds, you will find ownership in FNMA, FHLMC or GNMA securities.  If this is an investment you have opted in to, you are probably an owner of your own, or your neighbors mortgage.

The flow works something like this:  An individual apply’s for a mortgage loan and locks in an interest rate.  That loan is approved by a bank or mortgage company and is sent to closing by the loan officer or mortgage broker.  After the documents are signed, the funds are fronted by the bank or mortgage company to complete the transaction.  The bank uses it’s own funds to do this, and the mortgage company borrowers it from a warehouse line of credit.  That completed loan is then sent to it’s investor within a pool of other loans that were closed for funding.  If the investor approves the pool, the bank or mortgage company is re-imbursed the funds they fronted so they can continue to make mortgage loans.  The bank or mortgage company may agree to service the loan for the investor, or they may sell the servicing rights to another company.  The investor most of the time is FNMA, FHLMC or GNMA and the money you sent them in your 401(k) or 403(b) is used to purchase that pool.

Regardless of who owns the actual mortgage though, any questions should always be directed to your servicer.  They know the full chain of ownership and are directed on the behalf of the owners to act in their absence.