Mortgage Lender In Bankruptcy
What happens if my mortgage lender goes bankrupt? Banks and other mortgage lenders are required to have what is called "mortgage servicing rights" (MSR). This means they hold the legal right to take action on your property, like foreclosing or selling it. The MSR finances the bank's ability to help you keep up with your mortgage payments. If a bank goes out of business, its MSR rights would still be held by another entity—it just wouldn't be the original bank that lent you money. This can make a big difference in how the process plays out. If the new owner doesn't want your home, they might sell it at auction to recoup some of their money. Or they might take over your loan and try to make you pay it off. This can be tricky since they don't have all of the information about you that your original bank did, which could delay or even stop them from taking action. Things To Know When a Mortgage Lender Goes Bankrupt The last thing you want to worry about is the sta...