Mortgage fright spreads like wildfire

Why homeowners who needn't worry are running scared

The mortgage world has suddenly become very frightening to many people who have no real reason to be frightened. Their mortgages are in good standing, and they are not having any trouble meeting their payments, yet they are in distress — in large part, because so many around them are in distress. Fear is contagious. The only antidote I know is good information.

One important thing that people suffering from mortgage fright often forget is that a mortgage loan is a contract between two parties, and it cannot be violated by either without the permission of the other. If the loan is sold, the purchaser replaces the originating lender as the contracting party and is subject to the contract in the same way. If the servicing of the loan is sold, the servicer as the agent of the owner is required to abide by the terms of the contract, and the same holds if the loan is placed in a pool as collateral for a mortgage-backed security.