What happens to your mortgage if the mortgage company goes bust?

[Kimosabi]

After reading all this stuff from the US with sub-prime Mortgage Industry imploding in on itself.

I was wondering, What happens to the Mortgage if the Mortgage Company goes Bust?

 

[The Y-man]

The debt will be sold to another company, and they will start collecting your interest. In the past, loans have changed hands, often with the borrower not realising.

Worst (best?) case scenario - everyone forgets about the loan (and you keep quiet!)

Cheers,

The Y-man

 

[YChromozome]

I was wondering, What happens to the Mortgage if the Mortgage Company goes Bust?

I was wondering the same thing a couple of weeks ago.

I believe it still early days - the liquidators and receivers are probably still assessing the extent of the Mortgage lenders.

The most likely scenario is your loan is sold to another lender - Your loan is an asset. What is unclear is if the same mortgage agreement still follows or if you have to refinance. I doubt the company buying your loan will have the same lax lending practices - I suspect they would tighten their belt on what and who they will loan too. They may also likely to buy your 'asset' (loan) cheap to cover some of the risk. Maybe some of the more risky mortgagees will be forced out of the market.

Time will tell.

 

[numbercruncher]

But what happens in a crash situation, where the loan is alot more than the valuation of the Home ? I thinks theres fineprint in there that allows foreclosure to satisfy the Lenders creditors .... Ouch !