Re-financing, sold to new company, cashing in of points?

Question

Client re-financed home in February. The mortgage company immediately sold the paper to another company. Now, I'm aware that the conventional answer is that this is not a new mortgage, it's just selling the paper, BUT . . . advocating for the client, trying to find a way. They are making the mortgage payments to a new company.

Is the IRS really this clear on this?

-Tiger

========================================= MODERATOR'S COMMENT:

- This is very common. What exactly is the concern? The bank that wrote the mortgage sents the homeowner an alert regarding the servicing transfer, and the new servicing company sends a hello letter.

Alan · Accepted Answer

It is not a new financing by the taxpayer and therefore there is no "cashing in of points."

joetaxpayer · Answer

What does that expression mean?A new mortgage when buying a home allows one to write off the points. A refinance must be spread out over the life of the loan. The reassignment of the servicing is meaningless. It has no impact to the mortgage holder other than he send his payment to a new address.He may not take the points at once unless he sells the home or refinances again.Joe

Alan · Answer

I believe he was alluding to paying points on a mortgage that he was amortizing and wanted to know if the lender sold the note, would that be considered a refinancing so he could write off the points.

joetaxpayer · Answer

Right, that's what I assumed you meant, and answered above. It's 'no'. The servicing change is more than routine, most mortgages are sold into the secondary market and/or serviced by a third party.Joe

Seth · Answer

Per law, it's not a new mortgage.  Proof: You didn't pay a mortgagerecording tax, did you?Seth

Re-financing, sold to new company, cashing in of points?

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