Your home mortgage is reported to the credit bureaus each month just like any other credit obligation. These reporting practices aides’ banks in granting credit requests. Here are two reasons why your mortgage loan might not show up on your credit report…
Your loan is in the name of someone else-When you apply for a mortgage your name and social security number is tied to that loan for the loan term or until you sell or refinance the property. Once the loan is made, the servicer, (lender whom you make your mortgage payment to) is not permitted to arbitrarily change the terms of the loan by adding by adding or removing a borrower.
For example- take a married couple where the loan was originally made in the name of the wife only. Wife past on and the surviving husband makes the payment. Maybe the wife had a better credit score or income at the time of loan application. If the loan was made in one only party’s name the loan remains that way.
The mortgage would not automatically carry over to the husband upon death of a wage earner. The servicer would not report the mortgage on the hubby’s credit report as he was not on the original mortgage. While the loan is not reporting on his credit, he would still be responsible for making the mortgage payment if he is on title to the home.
Servicing changes-The residential mortgage market is built on two pillars; loan origination and loan servicing. Loan origination is the creation of mortgage loans which are then bundled and securitized and sold in the secondary market. Loan servicing collects the payment and services the loan for the benefit of the investor. They are the equivalent of a property manager collecting rent for the property owner.
The lender you make your mortgage payment to may change many times throughout the course of your loan. Here’s why: your loan is one of many loans in a massive servicing portfolio. When servicers need cash, they sell a portion of their servicing portfolio to another servicer which is why you receive notifications (snail mail, email and calls) informing you your servicer has changed along with the information for payment purposes.
Many mortgage companies right after origination sell your loan immediately to another investor, others keep your loan on the books either permanently or down the road they may sell them to generate cash as well. It is very common in the first 60 day window during a loan servicing change; your mortgage may not show up on your credit report. It can appear though you don’t have a mortgage on paper. This is nothing to be worried about, but can pose an inconvenience when refinancing as it can be somewhat difficult to figure out who your lender is for payoffs purposes. In most cases, if the loan is actually with the new servicer they would be the lender providing the pay off.
Loan servicing tips
- Your loan could be transferring to a new servicer, maybe you didn’t receive the letter- call your lender.
- Coming off a mortgage such a co-signed loan generally will not happen unless the home is refinanced or sold taking a co-signed individual’s name off the loan in the process.
If you are trying to refinance your home with the loan not in your name, you have options. A sharp mortgage professional can navigate your financial scenario through the steps it may take you make your loan green. As a best practice it is always worth a call to your loan servicer to get the full details.
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