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Re: .0
>Any thoughts on this? I assume SEARS means Sears Financial Network.
My mortgage was initially with Bank of Boston (well, "BancBoston
Mortgage Corp.") and around a year ago it, too, was sold to Sears Mortgage
Corp. This SMC is a different corporation owned by Sears, and isn't the
same as the Sears Financial Network. Sears has created/owns a lot of
smaller companies to do specific functions.
>Buy why do mortgages gets old and then re-sold. It seems like the
>institution that holds the mortgage always changes.
Why do people buy and sell stocks or buy and sell bonds? A
mortgage is just a type of bond that has a particular risk/return
profile. If someone wants to get more of that type of investment, they
buy a mortgage. If that person (or bank) later decides that they'd
rather move some of the money into a different investment, they sell
the mortgage.
From the bank's perspective, they can make a decent quick buck by
writing the mortgage and turning around and immediately selling it.
Lets say the bank already has enough mortgages in its portfolio that it
is holding and doesn't want to hold more -- the bank either has the
option of stopping their mortgage writing (which might get long-time
customers upset: "I've been a customer for years and now you won't give
me a mortgage even though I'm a great credit risk??") or else selling the
mortgages for a quick profit. The latter makes much more sense for them
both for happy customers and profits.
-craig
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| > I was just walking through the cafeteria and overheard a discussion
> about DCU selling their mortgage. Apparently they have sold it twice,
> but this 2nd one mentioned was the one that got me curious.....SEARS?
Technicalilty: the DCU didn't sell it twice. DCU sold it the first
time and then the second owner sold it.
Mortgages from the banks or DCU's point of view can be viewed as "risky"
investment. I mean risk from the interest rate perspective. Consider
this scenario:
DCU writes a lot of mortgages at today's rate: 7.5% or so.
3 years down the road, interest shoots up to 9%. It now has
a problem: it received 7.5% from mortgages but has to pay
depositors 9.0%. Now what?
Would we as depositors expect 9% on savings or would we accept a lower
interest rate because we know the DCU lent out money at 7.5%?
A more interesting question is why can't the DCU still service the mortgage?
From personal experience, Boston Federal sells its mortgages yet
services it. That means the monthly checks still go to Boston Federal.
They in turn may the holder of the mortgage.
Gim
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