Do I still send payments to my lender that went under?

Here’s the whole question:

“I just found out the bank my mortgage is with went under. I have not heard from them at all, nor can I get through on any of their many phone numbers. I do not know what to do. Do I still send my payment to the same place? Do I try to find another lender in a week? This is my first experience with anything like this-I am freaked out! I do not want my credit messed up and I do not want to lose my home!”

Yes, you still send the payments to the mortgage lender of record. Eventually you’ll get a notice of transfer when the loan is sold due to the bankruptcy of the lender, if they are the actual lender.

Many times the “servicing lender” is not the “owner” of the loan or the actual lender in the first place. They simply take in the payments (called mortgage servicing) for the true owner of the loan (called the investor). In that case, the fact that the lender and/or the servicer filed bankruptcy is of no consequence, since they really don’t own the loan anyway. The investor…the true owner will simply hire a new mortgage servicer to hand your payments.

If in your case the servicer and the lender are one, the lender’s bankruptcy does not affect current mortgage payors since the performing loans are the only real asset a mortgage company has.

Some new lender will buy the old lenders assets, including your mortgage, eventually. Until then operate as usual.

Good question!

Author: The Mortgage Insider

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