Can a mortgage be changed to a home equity loan when sold to another lender?

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Can a mortgage be changed to a home equity loan when sold to another lender?

My mortgage was changed to a home equity loan when the company went out of business and sold it. Also, I noticed on my credit report that there was a balloon payment at the same time as the regular mortgage is to be paid off. When I inquired they said they don’t have a record of a balloon payment and I have to call the credit bureau. This is a mobile home. Would that have anything to do with it?

Asked on August 17, 2011 Florida

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

In many circumstances loans secured by an item as evidenced by a mortgage or deed of trust are purchased by other lenders on the secondary market where the initial lender retains servicing rights for the loan to make money on it.

You need to carefully read your loan documents (loan agreement and promissory note) and the mortgage securing the promissory note for your mobile home. A loan's character cannot be changed merely by an assignment and purchase of it. Your loan is and always was a home equity loan or not. The only time a loan changes chacacteristics is when it is refinanced and a new one is obtained.

You should contact a representative of the lending institution holding your loan to answer your questions with more specificity.

Good luck.


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