Home loan transferred to Freddie Mac — What does this mean?
Lenders may sell your mortgage to other lenders for a fee.  For example,  your lender might sell your mortgage to the highest bidder who may want to purchase your mortgage by making a one time payment.  For your lender that's a quick profit, for the new owner of your mortgage, that's long term returns for a one time fee.  For your lender, that is forgoing long term returns for short term gains (and transfer of risk in case you default).   (Very similar to how bonds work in a stock exchange!) What does this mean to you? Nothing.  You will still keep making payments to your original lender.   What does 'transfer of ownership has not been publicly recorded mean'? It means, when you are asked about ownership details regarding your mortgage, and this could be in tax forms or refinancing etc., you would enter your original lender's information and not Freddit Mac's! Pro-tip There are lots of scams based on this.  You might receive an official looking letter in mail claiming your loan has been sold and you should start making payments to the new owner. DO NOT FALL FOR THIS! Call your original lender (use the phone number from your loan papers, not mail you received) and verify this information.   And if this were to happen, your original lender would always inform you first.   And hey, congrats on your new home! :)
Even assuming you were reading the balance sheet correctly it means nothing. What banks mostly care about is cash flow.  Do they have enough extra money to make the payments on whatever they borrow? I have never had a credit card company ask me about assets--they don't care.  They care about income with which to pay the credit card bill. Have a solid record of paying your bills and enough income to pay back what you are trying to borrow and you'll have an excellent credit rating no matter what your net worth.  Whether you are one person or a megacorporation makes no difference. "The credit and debit terms here is, talking from bank's point of view (shouldn't be a surprise, banks are never known to look at things from the customers' POV ;)).  In accounting, a liability (loans, owners capital etc) is a credit balance and asset (cash, buildings and such) is a debit balance.  Your account is a liability to the bank (in accounting parlance that is because they owe you every single penny that is there in your account, btw, in literal parlance too if you really make their life harder ;))  So when the bank accepts money from you, they need to increase their asset (cash) which they will debit (higher debit balance for asset means more assets), and at the same time they also have to account for the added liability by ""crediting"" the deposited money into your account. So when bank says they have credited your account, it means you have more money in your account. Now, if you transfer money from your account to another, or make a payment through your account, your account will be debited and the beneficiary account will be credited(bank's liability towards you reduces) More or less what everyone else said here... but hey, I could also take a swipe at banks ;))" You don't always have a choice. If you RTA, this is about loans that BoA bought from other lenders, or banks they acquired. If there is such a thing as a conventional mortgage contract that cannot be sold to another bank, I have never heard of it.   Any bank you borrow from is generally free to re-sell the loan to any other bank. You agree to the contract, not the name on the letterhead. "MBS is a fairly general term ""Mortgage Backed Securities"" which simply means that the bond is collateralized with mortgages.  Pass throughs are a type of MBS that is untranched: all bond holders of the deal are receiving the same interest and principal payments, there is no senior or subordinate class of bonds.   Agency passthroughs bond holders receive any principal and interest payments paid by the loans in the pool, minus a slice of the interest payment that pays billing and insurance fees (servicing and guarantee fees, usually a .5% slice of the mortgage interest rate).  On agency product (including Ginnies), if a loan defaults it will be bought out of the pool, with the bondholder receiving all of the expected principal and any interest due on the loan.  Agency deals with different classes of bonds are usually called REMICs.  Passthrough may also be split into  principal-only (PO) and interest-only (IO) pieces.   There is also a huge forward market in soon-to-be-issued passthroughs called the TBA market.  Ginnie Mae has two slightly different programs referred to as Ginnie I and Ginnie II.  Ginnie also has commercial and construction loan financial products.  Freddie and Fannie have the same type of financial products as Ginnie, but there are differences in the sort of loans that Ginnie has vs the other agencies, as well as subtle minor differences between the contract terms of the securities.  Ginnie is also more explicitly guaranteed by the federal government.  You may want to look at:  http://www.ginniemae.gov/index.asp (especially the ""For Investors"" and ""For Issuers"" sections.)  Wikipedia's MBS may be more clear than my description: http://en.wikipedia.org/wiki/Mortgage-backed_security#Types" Wrong way round. Transitional arrangements are non-binding guidelines that the lenders can observe if they choose to. The borrower - like your friend - doesn't  get to choose whether to use them or not. Your friend obviously can't afford the property, so if you do this, all I can say is congratulations on buying your new house, and I hope you got a deal on the mortgage. Good! The article says it was some kind of collateral protection insurance that customers were signed up for despite it being unrequired for the loan. The accusations is that WF racketeered about 800,000 loans by bundling in this bunk insurance cost as part of the loan structure. I'm glad you're not caught up in it. I believe you may be missing the point here. It appears(and they don't really verify this) that before BofA took over the loan, the homeowners were not using an escrow account. I know this is possible because i had the option of using one or not when i bought my house. So it seems that once BofA took over they automatically created an escrow account and when the normal payments the homeowners were making didn't cover the total monthly balance, they took it out of the payment specifically for the mortgage.   So, according to THIS story, its not sensational bullshit. This would be the bank creating an issue. That is, according to the facts that are presented in the article, which may not be the whole story....  Edit- spelling &amp; grammar so this is a loan for a house? a loan on a house? a new mortgage? you shouldn't just get a loan for the hell of it any time. interests rates are low because the yields on US treasuries have been pushed closer to zero, and thats pretty much that. the risk is on the bank that approves the loan, and not you. (your ability to repay should be truthful, but your payments are smaller because the interest is so low) "The expression ""in debt"" when talking about a person's financial affairs means that the sum of debit balances on all accounts exceeds the sum of credit balances on all accounts.    A mortgage account is not excluded from that. This definition also does not consider whether any of the debt is secured, or ownership of assets (shares, property, chattels, etc).   So, someone with a mortgage of one million dollars for a home that is worth two million is in debt by one million dollars, until they they sell the home (for that amount) and pay down the mortgage. That means ""in debt"" is not necessarily a statement about net worth." This is fraud and could lead to jail time. The vast majority of people cannot obtain such loans without collateral and one would have to have a healthy income and good credit to obtain that kind of loan to purchase something secured by a valuable asset, such as a home. Has this been done before?  Yes, despite it being the US, you may find this article interesting.     Hopefully, you see how the intent of this hypothetical situation is stealing. I work for a mortgage company but one that sells the loans we fund to banks. I've never heard of that risk mitigation incentive (lower rate for auto payments) but I know for a fact you will have a higher interest rate if you choose to pay your taxes and insurance out of your own pocket and not escrow them. I would contact the CFPB instead of an attorney and they will be able to tell you very quickly whether this is an acceptable practice or not. "Because this question seems like it will stick around, I will flesh out my comments into an actual answer. I apologize if this does not answer your question as-asked, but I believe these are the real issues at stake. For the actual questions you have asked, I have paraphrased and bolded below: Firstly, don't do a real estate transaction without talking to a lawyer at some stage [note: a real estate broker is not a lawyer]. Secondly, as with all transactions with family, get everything in writing. Feelings get hurt when someone mis-remembers a deal and wants the terms to change in the future. Being cold and calculated now, by detailing all money in and out, will save you from losing a brother in the future. ""Should my brother give me money as a down payment, and I finance the remainder with the bank?"" If the bank is not aware that this is what is happening, this is fraud. Calling something a 'gift' when really it's a payment for part ownership of 'your' house is fraud. There does not seem to be any debate here (though I am not a lawyer). If the bank is aware that this is what is happening, then you might be able to do this. However, it is unlikely that the bank will allow you to take out a mortgage on a house which you will not fully own. By given your brother a share in the future value in the house, the bank might not be able to foreclose on the whole house without fighting the brother on it. Therefore they would want him on the mortgage. The fact that he can't get another mortgage means (a) The banks may be unwilling to allow him to be involved at all, and (b) it becomes even more critical to not commit fraud! You are effectively tricking the bank into thinking that you have the money for a down payment, and also that your brother is not involved! Now, to the actual question at hand - which I answer only for use on other transactions that do not meet the pitfalls listed above: This is an incredibly difficult question - What happens to your relationship with your brother when the value of the house goes down, and he wants to sell, but you want to stay living there? What about when the market changes and one of you feels that you're getting a raw deal?  You don't know where the housing market will go. As an investment that's maybe acceptable (because risk forms some of the basis of returns). But with you getting to live there and with him taking only the risk, that risk is maybe unfairly on him. He may not think so today while he's optimistic, but what about tomorrow if the market crashes? Whatever the terms of the agreement are, get them in writing, and preferably get them looked at by a lawyer. Consider all scenarios, like what if one of you wants to sell, does the other have the right to delay, or buy you out. Or what if one if you wants to buy the other out? etc etc etc. There are too many clauses to enumerate here, which is why you need to get a lawyer." Do you know how SoFi's business model works? They're usually pretty conservative with their loans and refinancing. But I guess if they were looking to expand into riskier loans then it sounds like they've got some red tape that'd hold them back. Thank you for the explanation, much appreciated. "PMI IS Mortgage insurance. It stands for ""Private Mortgage Insurance"". This guy is just trying to get you to buy it from him instead of whoever you have it with now.  Your lender would always be on the policy since it is an insurance policy they hold (and you pay for) that protects them from you defaulting on the loan. Don't think of it as insurance for you in case you can't pay. If that should happen, your credit would still be trashed, the bank just wouldn't be out the money. You don't really get any benefit at all from it. It is just the way a bank can mitigate the risk of giving out large loans. This is why people are keen to drop it as soon as possible.  The whole thing about keeping the house in your estate after you die makes me think he is trying to sell you a different type of insurance called Mortgage Life Insurance. PMI isn't typically about that type of situation. Your estate will go into probate to work out your debts if you die and my understanding is that PMI doesn't usually pay out in that situation.  If this is what he is selling, buying such a policy would be on top of your PMI insurance payment, not instead of it. Be forewarned, personal finance experts usually consider mortgage life insurance to be a ripoff. If you want to protect against the risk of your heirs losing the house because they can't make the payments, you are better off with Term Life Insurance.  However, don't worry that they will inherit your debt on the house unless they are on the loan. If they don't want the house, they won't be obliged to make payments on it (unless they want to keep it). It won't affect their credit if they just walk away and let the bank have the house after you die unless they are on the note. Here is an article (in two parts) with a pretty good treatment of the issue of choosing your own PMI policy: ""Give Buyers Freedom to Choose Mortgage Insurance"" Part 1 Part 2" "It's OK... you can just admit you don't fully understand what happened...  Here's a quick run down:  1) Private banks (like Chase, Wells Fargo, etc.) start making bad loans. They do this intentionally because...  2) The bad loans are then bundled into what are called ""Mortgage Backed Securities"".  3) Ratings agencies like Standard and Poors rate these mortgage backed securities as AAA safe investments. Even though they know, and the banks know, they're junk.  4) Companies who don't (AIG) or can't (Fannie/Freddie) write sub prime mortgages are then sold bad mortgages as AAA rated investments.  5) The sales of investments are so popular and so profitable that the banks continue making more bad loans SOLELY so they can re-sell them as investments.  6) The laws preventing Freddie Mac and Fannie Mae from making sub prime loans are lifted and they start doing the same thing as everyone else, just before the collapse begins.  For most of the time these hijinks were going on, Freddie Mac and Fannie Mae were actually prevented from taking part."