Assignment of mortgages - Posted by Ben

Posted by Bud Branstetter on May 16, 1999 at 09:57:10:

These are very large portfolios of notes that are sold. Not all institutions are set up to service them. A percentage will payoff, a percentage will default and some will buy direct mail offers. The discount is not shown in the public records if I pay you direct to service my mortgage.

Assignment of mortgages - Posted by Ben

Posted by Ben on May 16, 1999 at 09:24:33:

In reviewing title reports, I often notice that soon after
an institutional lender closes on a mortgage, they assign
it for face value to another lender. What is the reason for this? It can’t be seasoned yet. Where does the original bank makes it’s money, on the points and committment fees? It seems like alot of work to go through for a few thousand in fees.
Why not hold the note for awhile? Is the purchasing lender not getting a discount or is the discount just not showing up in the recorded assignment documents? Thanks for the input.

Servicing, Points and Back End - Posted by John Behle

Posted by John Behle on May 16, 1999 at 17:19:18:

As well as the servicing that Bud mentioned, the points go to the mortgage company or other lender making the loan.

In addition, there are points on the back end. The final lender (funding source) pays additional fees to the brokerage making the loan. This is a premium paid by the funding source that is built into the interest rate. It looks good to the borrower because they are not paying as many points as they used to have to, yet they pay a higher rate in return.

A mortgage company could make a profit without up front points or loan servicing - just off the back end fees they make.