So you've always paid your mortgage on time and always made sure to read your lender's annual mortgage summary. Even though your lender may be thousands of miles away, you stay on top of things and have a good relationship with them. Then one day you wake up and find out that your mortgage lender has been bought or sold, or even worse, that they went bankrupt and just closed their doors. What do you do now, and how does this affect your mortgage?
It's been said for a long time that nothing is as sure as change. In modern markets, where interest rates can change every day, this is definitely true. When a mortgage lender goes out of business, for whatever reason, people who used to send their payments every month usually have a lot of questions. The first thing you should ask is, "How does this affect me?" - The good news is that your rates, payments, and other terms of your mortgage will not change in any case. The only thing that might change is the address where you send the payments, and even that might not change.
On the open market, mortgage lenders often buy and sell mortgage notes. There are mortgage lenders out there whose only goal is to sell their loans on the secondary mortgage market. In the past, when you got a mortgage from your local bank, it stayed there for the whole term of the loan. Today, a mortgage is sold an average of 1.5 times, and the original lender usually doesn't keep it unless they are a big mortgage underwriter.
When a mortgage company stops doing business, that doesn't mean the mortgages they wrote don't exist anymore. They are considered company assets and are usually sold to the highest bidder on the open market. No matter how much they pay for the mortgage, your rates, terms, and monthly payment do not change.
As a general rule, you should keep sending your payments to the same address until you hear directly from the new mortgage servicer. If you have money taken out of your checking or savings account automatically, you may not have to do anything. The withdrawal may change on its own.
Above all, don't stop sending your payment or "wait until you hear from the new company." This will hurt your credit, and you could be headed toward foreclosure. There are well-established ways for banks, lenders, and other underwriters to buy and sell existing mortgage notes. In the end, the only thing you need to worry about is making sure you keep making your monthly payments on time.
