Finance
When a lender 'sells' a loan on the secondary market, the borrower typically:
AMust refinance with the new lender
BContinues making payments, usually to the same servicer, even if the note holder changes✓ Correct
CIs released from the mortgage obligation
DMust renegotiate the loan terms
Explanation
When a loan is sold on the secondary market, the borrower is notified of the new owner but typically continues paying the same servicer. The loan terms do not change when the loan is sold.
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Key Terms to Know
Promissory Note
A written promise to repay a loan under specified terms — the borrower's personal financial obligation in a real estate transaction.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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