What happens if my mortgage company goes bankrupt?

Answer 1

Your mortgage is an asset to the mortgage company, which it can sell.

If it is still holding your mortgage when it goes bankrupt (highly unlikely - it would sell before then), your mortgage would be given by the court to the creditors, and the creditors would sell it to whomever would give them cash for it.

So, some way or another, it would end up in the hands of another lender.

-->Adam

Answer 2

That's a good question, especially now, because 109 mortgage companies have gone bankrupt since late 2006 due to the recent sub-prime debacle. While you have reason to be concerned, you are relatively safe, because the bank will most likely sell your loan off to another mortgage company or has already done so on the secondary market before this occurs.

You do however want to keep watch on when your payment is due and to whom. Those letters you receive from new mortgage companies that you usually throw away thinking they are propaganda could be from your new company introducing themselves, so you'll want to start opening that mail.

Remember, your payment is due to someone every month, so you'll want to be very proactive in realizing whom that company is. You don't want to miss a mortgage payment, because you didn't receive this months statement from your current company. I've seen it happen too many times in the last few months.

If your payment is due and you haven't received this month's coupon in a timely fashion, make sure you contact your current mortgage company to see where it is or if the note has been transferred to someone else. If it has been transferred, they will have that information and pass it along to you.

I hope this helps, and good luck.

Answer 3

The court will sell the company's assets. One of those assets is your mortgage. When all is said and done, you will owe a different mortgage company the remaining balance of your mortgage. The terms will not change. Selling mortgages is routine practice in the industry.

Answer 4

Odds are your mortgage will be sold to some other financial institution to pay for the debts of the failed mortgage company. You will just have to make your mortgage payment to the new company.

Answer 5

The debt is typically purchased by another underwriter or morgage company during an asset sale. You still have the same debt, just to another company.