To understand why renegotiating your loan will probably only work if you fit the above conditions, you must first understand the workings of the mortgage industry. Mortgage banking firms typically sell off your mortgage after they make the loan, says Bonnie O'Dell, a spokesperson for the Federal National Mortgage Association (Fannie Mae). Sometimes banks or savings and loans, however, hold onto the mortgages, especially if they are adjustable loans, or short-term fixed-rate loans.