What happens to a person’s mortgage when the lending company goes bankrupt?
March 11th, 2010 | 
Author: Dοеѕ thе person pay thе finance balance tο thе bankruptcy incite? Dοеѕ thе person hаνе tο find another lending company tο take up thе finance balance?
Posted in Mortgage FAQ
it usually gets sold to a different company.
What usually happens is that the finance is “sold” or “transferred” to another finance company, but I would check your finance documents to see what it says.
It’s sold to another lender. You’ll be told in the mail where and to whom to send the payment.
the finance is give to another servicing company,nothing exchange for you other than a new take up to mail the check.
Usually the finance gets sold to another lender…especially if it is a huge company. A finance is an asset to the Bank so even if they don’t sell it themselves it will be liquidated by the courts. It is dodgy that you would really pay the bankruptcy incite yourself or have to find a new lender…as it isn’t your fault they went bankrupt in the 1st place.
Your mortage is considered to be the equivalent of an asset. Depending on the type of bankruptcy, either nothing will exchange, or they can sell your mortage to another lender and you will make your checks out to them instead. Check with your state’s laws, but there should be a time period that they give you between when they report you and your checks need to go to the new company.
Lending companies usually sell mortgages soon after origination, so all they have left is the servicing rights. They get a fee for collecting payments and performing other administrative chores. If the company gets liquidated, the servicing rights can be sold off just like any other asset.
Some one will buy the paper.
Another finance company picks up the finance and really nothing changes except were you send the payment.