Sale of mortgage.

UrbanVixen

This is not a request for legal advice. I just want to understand a legal principle.

If I take out a mortgage with Bank X that will all be reduced to formal writing. I understand that to be an effective contract between Bank X on the one part and me for the other part.

Recently, a number of loans were announced as being sold by one financial institution to another.

Q1. If I am in a contract with Bank X what legal authority do they have to sell the loan on to another party ?

Q2. If I contracted with Bank X on the terms and conditions agreed does a new entity to whom the loan is sold have authority to vary those terms to my disadvantage ?

ohnonotgmail

UrbanVixen wrote: »

This is not a request for legal advice. I just want to understand a legal principle.

If I take out a mortgage with Bank X that will all be reduced to formal writing. I understand that to be an effective contract between Bank X on the one part and me for the other part.

Recently, a number of loans were announced as being sold by one financial institution to another.

Q1. If I am in a contract with Bank X what legal authority do they have to sell the loan on to another party ?

Q2. If I contracted with Bank X on the terms and conditions agreed does a new entity to whom the loan is sold have authority to vary those terms to my disadvantage ?

the authority you gave them in the mortgage contract. If your original bank can vary the terms so can the institution that takes it over.

randomrb

ohnonotgmail wrote: »

the authority you gave them in the mortgage contract. If your original bank can vary the terms so can the institution that takes it over.

They cannot do anything more than your current bank can

Stanford

If you dig deeply into your contract you will find that you are contracted with Bank X and all its assignees hereinafter.Thats what allows Bank X to sell your mortgage onwards, however such a sale cannot vary the terms and conditions of that contract without your consent

Peregrinus

Stanford wrote: »

If you dig deeply into your contract you will find that you are contracted with Bank X and all its assignees hereinafter.Thats what allows Bank X to sell your mortgage onwards, however such a sale cannot vary the terms and conditions of that contract without your consent

But if the existing terms of your loan agreement allow the lender to, e.g., vary the interest rate or demand early payment or take other steps that might be unwelcome to you, then the assignee can exercise those powers.

Marcusm

randomrb wrote: »

They cannot do anything more than your current bank can

In some cases, a bank may be subject to significant limitations outside the strict confines of the Liam agreement - generally as a result of their regulatory status or various (often voluntary) codes of conduct they may have agreed to adhere to. Not all purchasers if such loans will be subject to these restrictions - they can be bound only by the actual conditions of the loan.