So here's one question most borrowers ask: When mortgage lenders go out of business, do homeowners still have to make their monthly payment? If you are one of the people who ask this question, this write up is for you.
So, do you really need to continue paying for your loan when your lender is gone? The short answer to this, is YES. After all, it's still a debt that needs to be paid for.
What Happens When Your Lender Is Out Of Business
To make the long explanation short, even if a mortgage company goes bankrupt, another company is willing to take over the job of collecting your payments. Meaning, what's most likely gonna happen is that if your lender gets bankrupt, they will sell their assets to another financial institution, thus transferring the servicing of your loan as well. So since you signed a mortgage note when you got your loan, you as a borrower agreed that you will continuously make your payments regardless of who services your loan.
Conclusion
To summarize the whole idea, lenders can transfer the servicing of your mortgage to another company if they go bankrupt, so this means that you still have to make your payments regardless of who sends you a statement. Your mortgage dues won't go obsolete simply because your lender disappeared, because surely, someone else took over the role of collecting your payment.
Furthermore, also keep in mind that paying on time is still very important even if your loan has been transferred to another company. Because as a whole, your lender's bankruptcy is their problem, your only concern should only be making the right payments and eventually getting past the mortgage dues. It's also helpful to document your payments just in case complications arise in between transitions, although this is also rare. But just to make sure that your payments can be tracked any time, it's convenient to have a copy of your payment docs, especially when two different companies handled your mortgage.
