Client refinanced his home last year and I was amortizing his loan fee over the 30 years of the new mortgage. This year he told me his bank, A, had sold his loan to bank B. If he had refinanced on his own, I could take the balance of the loan fee this year. But what happens to it when the bank sells the loan? It is obviously paid off by Bank B but not by the client. Nan, EA in LA
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This happens frequently when banks merge, reshuffle, etc. The loan has not been sold at this time. The loan was sold to one of the government finance agencies (GNMA, FNMA) and they parcelled it out with millions of others to various investors. What was sold in your client's case was the loan servicing contract for which the servicing company collects about 1/4% of the interest rate. The payee just changed names and addresses. The loan remains as it was. Continue to amortize the points until the loan is completely gone. Linda Dorfmont E.A., CFP, CSA and real estate finance student.
Aye, but the client did not pay it off, so ... continue to march. (old army saying) ChEAr$, Harlan
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