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What happens when your mortgage lender closes?

On Behalf of | Jan 1, 2021 | Real Estate |

One of the things that you probably never worry about is your bank going out of business. It really is not something that happens often. However, what happens when your mortgage lender alerts you that is it closing? 

According to the Federal Trade Commission, it often depends on where you are in the mortgage process as to what next steps you should take. 

Before closing your loan

If the lender goes out of business before you close your loan, then there is really nothing left of that relationship. You will have to find a new lender and begin the process all over again. You may find it is easier to apply with another lender since you have already gone through the process, so you will know what documentation you need and the general process to expect. 

After closing your loan

If you already have a mortgage loan, then you need to read through all your paperwork. The chances are good that your original lender sold your mortgage to a mortgage servicer. If this is the case, it should tell you that in your paperwork, and nothing should change for you. You can contact the company servicing your mortgage to see if there is anything you need to do differently. 

If the lender who still has your mortgage is the one going out of business, then that lender will usually send you a notice about the next steps. In most cases, the lender will sell your loan. Your lender will likely send you new paperwork. You will get instructions about anything that will change, such as where to send your payments. 

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