What to Do If Your Mortgage Company Goes Out of Business

Mortgage Company Going Under? Here's What to Do...

Right smack in the middle of our refinancing process, our mortgage representative fell off the face of the Earth. We gave her the benefit of the doubt, that perhaps she had other clients and we weren't her priority. When we didn't hear back for a few weeks, I called the main office. No response. Days later, we get the message on the image to the left: The company is no longer taking applications-they are yet another mortgage company going under.

This all-too-often event can affect folks currently in the application process, as well as those who are currently paying on a mortgage. Here are some things to keep in mind should your mortgage company fold, too.

Fact #1: If you mortgage company goes out of business, keep making payments!

According to the trusted financial advice website, BankRate.com borrowers should continue making their monthly mortgage payment if and when the lender goes out of business. These mortgage payments are still considered an asset to the company, so if the lender is filing bankruptcy, a new company will most likely purchase these assets. During the transition, third parties (Fannie Mae, for instance) will step in and oversee transactions until the sale is complete. So, to make a long story short, someone is still expecting that monthly mortgage payment. A mortgage lender going out of business does not mean a temporary relief from payments.

Fact #2: Your Loan Term Will Not Change if Your Mortgage Company Goes Under

According to the blog, Finance Buff when a mortgage company goes out of business the terms of a borrower's mortgage will not change. If someone had a fixed rate mortgage, it will remain a fixed rate mortgage. If the loan was an adjustable rate mortgage, the rate will adjust to the terms specified. So, when a mortgage company goes out of business, the original terms of the current mortgage will not change. The check may be going to a different address, but that's all that should change in this circumstance.

Fact #3: If You Are Close to Satisfying Your Mortgage- Keep Your Paperwork