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1.2.3.3 Loan Owner

The loan owner is the entity that has the present right to receive payments on the note. When the owner is also the mortgagee or beneficiary of a deed of trust, it has the right to initiate foreclosure proceedings upon default by the borrower.21

Many mortgages are sold or otherwise transferred to another entity shortly after origination. As a result, the loan owner often is not the bank or mortgage company that made the original loan. Some mortgage loans are pooled and sold (i.e., securitized) pursuant to a trust agreement so that the loan owner is a trust. Large financial institutions typically serve as trustees for these trusts, and the name of the loan owner will usually identify both the trustee and the trust (e.g., Deutsche Bank National Trust Company as trustee for the MLMI Trust Series 2005-SL1 or JPMorgan Chase Bank as trustee for C-Bass Mortgage Loan Asset Backed Certificates, Series 2004-CB).

Sometimes it is difficult to determine who is the present owner of a mortgage loan. A mortgage loan may be assigned several times during its term, and may be held by one entity but serviced by another.

Commonly, a servicer acts as the agent for the holder under the express authority delegated to it under a servicing agreement or, in the case of securitized loans, a pooling and servicing agreement. Occasionally, the servicer will refuse to provide information about its principal—the owner and holder of the note and mortgage. The Truth in Lending Act (TILA) contains a provision that requires loan servicers to tell borrowers who the actual holder of their mortgage really is.22 The servicer is required upon written request to provide the homeowner with the name, address, and telephone number of the owner of the mortgage or the master servicer23 of the mortgage. These TILA requirements related to loan ownership are discussed in more detail in § 4.2.8, infra. A 2009 amendment to TILA also added a provision which, if ownership of a mortgage loan is transferred, requires the new owner or assignee to notify the borrower within thirty days after the loan is sold or assigned of its identity, address, telephone number, the date of transfer, and location where the transfer is recorded.24 In addition, the new owner must disclose how the borrower may reach an agent or party with authority to act on behalf of the new owner, and any other relevant information regarding the new owner.25 Failure to comply with these requirements gives rise to a private right of action.26 This provision is examined in detail above at § 4.2.7, infra.

The Real Estate Settlement Procedures Act provides a similar right to obtain information about the owner of the mortgage.27 The provision requires a servicer to respond within ten business days to a borrower’s request for the identity, address, and other contact information about the owner or assignee of a mortgage loan.28

Fannie Mae and Freddie Mac have taken steps to enable borrowers to quickly determine whether Fannie Mae or Freddie Mac owns their loan. Borrowers and advocates can either call a toll-free number29 or enter a street address, unit, city, state, and zip code for the property location on a website set up to provide ownership information.30 The website information, however, may in some cases refer to Fannie Mae or Freddie Mac as “owners” when in fact their participation may have been as the party that had initially purchased the loans on the secondary market and later arranged for their securitization and transfer to a trust entity which ultimately holds the loan.

Finally, in light of problems many borrowers faced in trying to find out who owned their loans during the foreclosure crisis, many states have adopted statutes and rules to require these disclosures in the context of foreclosures.31

Footnotes

  • 21 {21} See National Consumer Law Center, Home Foreclosures Chs. 2-4 (2019), updated at www.nclc.org/library (discussing authority to foreclose).

  • 22 {22} 15 U.S.C. § 1641(f)(2). See § 4.2.8, infra.

    The provision also should require disclosure to the borrower’s advocate with a properly signed release form. See Appx. E, infra.

  • 23 {23} If the borrower is provided with the name and address of the master servicer, a second request under section 1641(f) may be sent to the master servicer to determine the owner of the loan.

  • 24 {24} See 15 U.S.C. § 1641(g)(1)(A), (B), (D).

  • 25 {25} See 15 U.S.C. § 1641(g)(1)(C), (E).

  • 26 {26} See 15 U.S.C. § 1640(a).

  • 27 {27} 12 U.S.C. § 2605(k)(1)(D), added by Pub. L. No. 111-203, 124 Stat. 1376, tit. XIV, § 1463(a) (July 21, 2010).

  • 28 {28} See § 3.3.10.3.2, infra.

  • 29 {29} For Fannie Mae call 1-800-7FANNIE (8:00 a.m. to 8:00 p.m. EST); Freddie Mac call 1-800-FREDDIE (8:00 a.m. to 8:00 p.m. EST).

  • 30 {30} Fannie Mae Loan Lookup, www.fanniemae.com/loanlookup; Freddie Mac Self-Service Lookup, https://ww3.freddiemac.com/corporate.

  • 31 {31} See National Consumer Law Center, Home Foreclosures § 3.2.3 (2019), updated at www.nclc.org/library.