Lender is bankrupt, now what?

A friend recently asked me if he would have his home for free if his lender went out of business. I explained that is now how it works. Oftentimes the servicing rights are held by a different institution and they’ve paid good money for those rights. Also the loan paper itself gets sold and someone owns the note somewhere. So, you must continue making payments even if your lender goes out of business.

When your lender goes bankrupt – Apr. 2, 2007: “With one of the largest subprime lenders, New Century Financial Corp., filing for bankruptcy Monday, borrowers may be wondering what will happen to their loans now.”

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