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Comment by JohnFen | Hacker News Reader

I strongly believe that selling ongoing loans to other companies should just be flat out illegal. You entered into a contract with your local bank, not Wells Fargo. It should not be legal any party in the contract to unilaterally rope the others into a contractual relationship with someone who was not involved.

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I certainly don't remember all the terms of my mortgage, but surely there's a "we can resell your mortgage" provision in the terms that we bilaterally agreed to.

If you don't have the ability to strike that clause is it really bilateral?

You are under no obligation to sign. They are under no obligation to accept a modified contract. Both sides can walk away. Both sides will be bummed, but the bank is likely to care a lot less.

These kind of libertarian explanations always conveniently neglect to mention any power imbalances between the parties. When called on it the response is usually just a less polite version of "oh well".

How about if a company is taken over? Should I be “forced” to work for a company I did not decide to work for?

You can quit your job. You can't quit your mortgage.

What would an alternative be in the case of a lender being sold? Force a balloon payment for the balance? It seems a better alternative to be able to transfer the loan like any other asset.

Well, that's an entirely different, and special, case that would require different rules, of course.

That's not what causes loans to be transferred to others in the vast majority of cases.

You can, though, that's literally what refinancing is.

In many (but not all) cases, that's true enough, yes.

Return the house keys to the mortgage holder and walk away.

(This is about as convenient, pleasant, and useful advice as the "just quit your job" advice).

Actually it’s much easier than that, though not in the current interest rate environment: you just refinance, and likely save money along the way.

Note that your first mortgage in CA is nonrecourse, but a refinanced mortgage is not nonrecourse (meaning the lender can come after you personally if you end up underwater).

It's not unilateral. The contract you sign has a clause that gives them permission to sell the loan.

It is unilateral. That you agreed to give them the right to make such a unilateral change doesn't make it no longer unilateral.

I think it's an unconscionable clause.

Why would it be unconscionable? I don’t understand why people would care if their loan is sold. My student loans have been sold a couple times and I didn’t mind. What’s the downside for the borrower?

Who owns the loan doesn't make a lot of difference, really, compared to who services the loan. But even still, you may not want to do business with some company for any number of reasons: maybe they treated you or someone you know poorly in the past; maybe you don't like how they do business; etc.

The loan servicer is more important --- some of them are terrible at their job and tend to misapply payments etc, causing extra work for the borrower.

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