Mortgage FAQ

8. Can my loan be sold? What happens if my lender goes out of business?

Loans can be sold at any time. Lenders frequently buy and sell pools of mortgages in a secondary mortgage market, resulting in lower rates for consumers. If a lender buys your loan, he or she assumes all terms and conditions of the original loan. For you, the only thing that changes when a loan is sold is to whom you mail your payment. If your loan is sold, your existing lender will notify you that your loan has been sold, who your new lender will be, and where you should send your payments from now on.

You are still obligated to make payments, even if your lender goes out of business. Loans owned by a lender going out of business are generally sold to another lender. The lender who purchases your loan is then obligated to honor all terms and conditions of the original loan. Therefore, with regards to your loan payments, it makes little difference if your lender goes out of business. Sometimes there will be a gap between the date of your lender going out of business and the date that a new lender purchases your loan. If this happens, continue making payments to your old lender until you are asked to start making payments to your new lender.

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