You don't even get to choose your mortgage company.

A few years ago a friend of mine bought a house and actually turned down a house who's sellers had a bank of America mortgage as he had bad experiences in the past. He went out of his way to choose not to deal with them, but to his suprise 30 days after he closed he got a letter in the mail telling him that his mortgage was sold to Bank of America!

And not suprisingly he had the same issues.

As part of your disclosures, lenders that plan to sell your loan will usually be required to disclose this fact, so you can deal with a lender that keeps their loans in house. The last house I bought the company disclosed that they might sell the loan, but they remain the servicer on the loan, so I don't even know who owns it.

Since then I've bought 2 houses, and both mortgage companies I've worked with had that clause.

Is it actually possible to find someone who won't? Or is it just a false sense of choice like the ability to "choose an ISP that says they won't sell your information"?

Some credit unions may keep the mortgage in-house, but afaik it's mostly private banks working with HNWIs that will do so 100%. Those mortgages are often very large or non-standard (like 100% financing interest only or a combo mortgage/heloc).

Some small community banks maybe? Some banks keep at least a portion of their loans in house. In some cases they may still have that clause in case they decide to sell it later, even if they plan to keep it in house.

It is possible. Smaller banks and CUs will often keep mortgages. Suntrust for example, tends to keep their mortgages.

I have never purchased property in the US, but I keep reading horrible anecdote after horrible anecdote, so I have to ask:

As a buyer, why would I even care who the seller has their mortgage with? Why would that matter?

Where I'm from, the real estate agent deals with that shit. When you close the deal, the agent calls up the new bank or faxes them or whatever so that they open a mortgage for X amount for the piece of property for the buyer, and directs them to send Y to the old bank so that they close out the previous mortgage, and Z to the agent's account, who then takes their cut, and forwards the remainder to the seller.

Is this not how it works in the US?

It really shouldn't be relevant. Your title company will usually handle closing (apparently where you are form the agent does this? Here, the agent usually helps you so you don't have to deal with the title company, but the title company is responsible), and they will deal with the previous mortgage company. Usually you should have title insurance in case a problem does crop up (required for most lenders)- and your title company can deal with it. So the real nightmare is when your title company handling the transaction is a problem. (Usually the seller chooses the title company, but this can be negotiated between buyer and seller, and many sellers are more than happy to use the title company of your choice- if you pay for it).

Title company? Title insurance?!? A third-party for-profit company handles some aspect of the transfer of property, instead of, you know, government? And in case this third party fucks up, you need to pay for insurance?!?

Jesus.

You said the real estate agent handles it where you are from- are real estate agents government officials where you are? You don't have to have a title company, you could do it yourself, but a typical real estate transaction involves large amounts of money and multiple parties, so most people want someone else to handle it all. If you are borrowing money, you lender will probably insist on it.

This is how it works in Sweden, as far as I understand it:

Real estate agents have to be licensed, and part of their duties is of course to verify that the seller is who they say they are and that they own the thing they're trying to sell. When I sold an apartment, I had to show my ID to my agent so he could verify me.

The registry of who owns what pieces of land is managed by a government office, and government data is by legal default public, so checking if a seller actually owns a piece of land is trivial. You don't need to chase down a distributed sealed deed history thing thing, it's basically a single national database at this point.

So it's really simple to do, and the responsibility is on the seller's agent, who in turn has a strong incentive to not screw up, or they lose their license and their job.

When you go to your lender for a pre-approval on a mortgage, they want to know which piece of property you're buying, and they typically check that it's being sold by a licensed real estate agent, because if it is, then they can be assured that the seller is verified and actually can sell the property.

When you sign the purchase contract - which is typically one or two pages long - you sign one copy for the seller, one for the buyer, one for the agent, and one for the government office, and the agent helps you fill out the (short) form that goes with it so you can send it in and get the ownership legally transferred to you. That's it.

There's so little work involved with verifying ownership and transferring ownership, that it's just put on the shoulders of the real estate agents. The idea that you would need yet another party to handle this aspect is completely ludicrous in Sweden, it makes no sense.

No. There are no loan assumptions in US. Seller’s mortgage holder is irrelevant.

Ok. Good. :-)

So why was Klathmon's friend bothered by it?

Because now his friend is forced to be a customer of Bank of America unless he goes through a refinancing process. Even then, unless he's very careful, he could end up refinancing with a company who turns right back around and sells the mortgage back to Bank of America. The same thing happened to me. I've had two mortgages through other banks who then sold my mortgage to Wells Fargo forcing me to have to deal with them and I had absolutely no say in it.

In his case Bank of America attempted to forclose on a house he bought after he bought it.

I presume your friend had title insurance, and the title company dealt with it?

Oh I'm sure, I didn't follow it all that closely but I remember it being resolved within a few weeks, but the headache was apparently enough for him to want to avoid sellers with BofA in the future.

It's been almost exactly 2 years since I bought my condo, and I'm currently on my fourth mortgage company. Which is now Wells Fargo! I don't know why they keep selling my mortgage.

*servicer. Fannie or Freddie probably own the note.

Banks don't do anything useful that cannot be provided by other means. They are completely useless. The only thing that banks do is to provide credit against things you already currently own, like mortgages and commercial loans. But these things could very easily be provided by an official agency. For example, if you don't pay your monthly mortgage you just lose the house and an official agency will deal with the sale of the property (maybe through third-party services). Same thing for commercial loans. There is no need to create a private, for-profit bureaucracy to handle this.

So... Your alternative to banks is banks, but public sector, and you expect this to improve the bureaucracy level?

It doesn't need to be the public sector directly. What I mean is that banks are not using their own money to do what they do, so it does't make sense to let them charge interest. There could just be a set of regulated institutions that charge fixed fees (independent of the amount of the operation) to perform these tasks, which basically consist of converting one form of wealth (real state or business assets) into monthly obligations.

More like reuse an existing bureaucracy instead of creating a parallel, private one.