What happens to a person’s mortgage when the lending company goes bankrupt?

Garry C asked:


Does the person pay the mortgage balance to the bankruptcy court? Does the person have to find another lending company to take up the mortgage balance?

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Comments (9)    Posted in Personal Finance    

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9 Responses to 'What happens to a person’s mortgage when the lending company goes bankrupt?'

  1. Meenamae - February 17th, 2009 at 10:25 am

    Buffalo Grove property

    it usually gets sold to a different company.

  2. sun_shinevt - February 18th, 2009 at 10:24 pm

    Oakland office space

    What usually happens is that the mortgage is “sold” or “transferred” to another mortgage company, but I would check your mortgage documents to see what it says.

  3. Ronin - February 20th, 2009 at 5:34 pm

    Dallas equipment rental

    It’s sold to another lender. You’ll be notified in the mail where and to whom to send the payment.

  4. leonard s - February 22nd, 2009 at 5:24 pm

    Missoula mt Commercial Real estate

    the mortgage is give to another servicing company,nothing change for you other than a new address to mail the check.

  5. SCH - February 23rd, 2009 at 1:31 am

    Frederick MD real estate

    Usually the mortgage gets sold to another lender…especially if it is a big company. A mortgage is an asset to the Bank so even if they don’t sell it themselves it will be liquidated by the courts. It is unlikely that you would actually pay the bankruptcy court yourself or have to find a new lender…as it isn’t your fault they went bankrupt in the 1st place.

  6. rhyno - February 25th, 2009 at 12:41 pm

    Malibu homes

    Your mortage is considered to be the equivalent of an asset. Depending on the type of bankruptcy, either nothing will change, 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 notify you and your checks need to go to the new company.

  7. Thomas O - February 25th, 2009 at 9:10 pm

    Missoula real estate

    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.

  8. Holy Defender of The Republic - February 26th, 2009 at 2:13 am

    Santa Monica homes

    Some one will buy the paper.

  9. KitKat - February 28th, 2009 at 12:20 am

    Portland Real Estate

    Another mortgage company picks up the mortgage and really nothing changes except were you send the payment.