How to Manage Your Mortgage if Your Lender Closes of Files for Bankruptcy

FTC, May 12, 2008

When a mortgage company closes or files for bankruptcy, its customers may be left wondering about the impact on their own loans. The FTC says consumers should continue to make their mortgage payments as usual, and offers these additional tips:

• If your lender files for bankruptcy after your loan closes, continue to make your payments to the mortgage servicers by the date they’re due.
• If your mortgage servicer files for bankruptcy or goes out of business, it’s very likely that your loan will be transferred to another financial institution for servicing. How will you know? Read your mail and email — and pay attention to phone calls and messages that deal with a change of lender, a late payment, or a payment that wasn’t received. To avoid a scam, review the notices and call to confirm the new loan servicer before you send a payment.
• If your loan is transferred to another servicer, you should get two notices — one from your current servicer and one from your new one.

For more information about what to expect in today’s mortgage market, read the FTC’s alert, "How to Manage Your Mortgage If Your Lender Closes of Files for Bankruptcy," available in English at www.ftc.gov