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What Happens To My Mortgage When My Bank Goes Bankrupt?

By Bob Redtree

My bank went under, where did my mortgage go?

During these hard economic times there are many financial questions floating around out there. Perhaps, the most serious is, “What will happen to my mortgage when my bank goes bankrupt?” There is a short answer to this, nothing. Maybe you will have to pay payments to a different lender but the contract applies.

What Happens When My Bank Goes Bankrupt?

When a bank goes bankrupt it is simply their business that goes under. Some banks simply go under without any kind of other bank extending from this. Other banks get bought out by another bank and simply get their name and staff changed. Even if these banks go under it does not mean that any loan you had simply is depleted. You are still held responsible for the money you are supposed to pay on the loan.

What Happens to My Mortgage?

Your mortgage is considered an asset to a bank; therefore two things may happen with it. You may be required to continue paying towards that company’s debt. If the bank is bought out then you will remain making payment to the same location just with a different name. The mortgage may also be bought out by another mortgage lender. Banks often sell off as many mortgages as they can if they go bankrupt in order to pay towards their debts. If your mortgage is sold then the only change will be the address that you send the payment to. In some rare instances banks actually ask you to pay your loan in full at that time. In these instances there are steps you can take towards proving this request to be unreasonable.

Summing It Up

So if you find yourself asking what happens to my mortgage when my bank goes bankrupt, then you can relax. More than likely there will not be many things that result from this.

Related posts:

1. Why Do Mortgage Rates Vary From Bank To Bank?
2. What Does The Bank Look At To Determine My Mortgage Rate?
3. How Do Bank’s Set Their Mortgage Interest Rates?
4. What Happens When A Bank Forecloses On A Mortgage?
5. Why Would A Bank Modify My Mortgage Loan?