What To Do If Your Mortgage Lender Goes Bankrupt

Panic! Burn down your house! Ha ha, just kidding. Actually, you shouldn’t let your mortgage lender’s death pangs interfere with your payments, says Gerri Willis of CNNMoney, because your loan will just be sold to another lender. However, make sure you review the details of your mortgage agreement; the terms should remain the same no matter who buys your loan, and you have a 60 day grace period to get your payments to your new mortgage lender.

If you need mortgage satisfaction documents from a loan you’ve paid in full but don’t know who to contact now that the original lender is out of business, contact your State Attorney General’s office.

If you’ve been pre-approved for a home loan when the lender goes bankrupt, you should call the lender directly and ask point blank if they will be able to make your loan, says Dana Dratch at the Chicago Sun-Times. If they say they can’t, ask whether they can make arrangements to pass your loan application over to another lender.

Top Tips: If your mortgage lender goes under [CNNMoney]

(Photo: Getty)

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  1. SadSam says:

    I would also advise that if you escrow for taxes and insurance and your mort. is sold to another company to keep on top of the amount of escrow held by the original company and the deadlines for paying taxes/insurance. The property owner, you, are responsible for making sure taxes/insurance are paid so make sure those payments are made by the new company.

  2. mac-phisto says:

    ALSO VERY IMPORTANT: if you contract payments thru a 3rd party vendor (such as Equity Accelerator), make sure you contact them as soon as you receive notice to assure that they don’t pay the wrong party.

    a friend of mine had a little problem with this last month when netbank closed their doors & stopped processing payments. she had to jump thru a few hoops when a payment ended up in limbo.

  3. ShadowFalls says:

    You need to keep an eye on things. Your loan may be sold to another lender and right around the time, or even before you sent your payment. The next lender will then want payment, meanwhile the other was cashed and the new lender will make it all your fault. From what I have seen, they tend to slow at notifying people.