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Selling off securitized mortgages? MBS?
How does a mortgage lender decide who to sell the mortgages to? Is it just whoever will pay the most for them, or are certain types of mortgages allocated to different entities who create contrasting mortgage-backed securities with them? In other words, how does Wells Fargo decide betwen selling their mortgages to Freddie Mac, Morgan Stanley, Fannie Mae, Merrill Lynch, etc.?
Renting & Real Estate - 2 Answers - 2008-03-06 17:59:30

Best Answer
They usually have standing agreements with several buyers. Usually it does get down to who is paying the highest price for the particular type of mortgage on a certain day. They usually sell large groups of similar mortgages in a package. In addition to price, they may consider the servicing requirements and reputation of a purchaser. Usually standard mortgages go to Fannie or Freddie, and more complex ones with longer payment periods or lower doen payments than normal go to Wall Street investors.

All Answers
Answer 1
It's three different factors depending on which company's your talking about. Most smaller direct lenders have wholesale warhouse lines so the can fund the money their self. This company's will hold on too your loan for a month then sell it because they do not have the capital and the labor force to collect all the payments and process them. Then there are brokers who your give all them your info and they call other lenders and bank to see who approves you and what rate they can get for their client. They will even quote you a rate without you being approved. The last type of company's out there are the big lenders. They will sell clients, they will work with other lenders so you end up with them. Countrywide was famous for this and so is Wells Fargo. Now about mortgage backed securities. This big lenders like countrywide will have investors or hedge funds that will invest there money to lend to you so the can make the interest that they charge you. Just like any commodity there is supply and demand. They more money this guys were making the more they invested an till the economy crumbled stating an the middle of 2007. As the foreclose rate sky rocketed this investors our getting burned. That is why there is no more stated loans. That is why jumbo loans rate are through the roof. They only loans getting done today our Fanny May and Freddie Mac backed loans. This loans our still bought by the invistors but if they lose there money this agency's will cover them. That makes them a safer bet for this investors so there willing to keep buying them but Fannie Mays and Freddie Macs standards have been getting tighter. As this happens more and more people do not qualify.
2008-03-06 18:59:00

Answer 2
They usually have standing agreements with several buyers. Usually it does get down to who is paying the highest price for the particular type of mortgage on a certain day. They usually sell large groups of similar mortgages in a package. In addition to price, they may consider the servicing requirements and reputation of a purchaser. Usually standard mortgages go to Fannie or Freddie, and more complex ones with longer payment periods or lower doen payments than normal go to Wall Street investors.
2008-03-09 18:20:43