The customers of a mortgage company get in a bind when they mortgage company files for bankruptcy. They will inevitably wonder what happens to the remaining debt. The Federal Trade Commission states that consumers should not discontinue the payments. Understanding the tips handling a bankruptcy case will guide you during the financial maze.
What to do if the bankruptcy happens before closing the loan
Call the firm to know if they plan to transfer the funds to other mortgage companies in McKinney Texas. A transparent lender will let you know if you need to shop for another mortgage loan.
What to do if the bankruptcy happens after closing the loan
The lender will sell the mortgage to another institution, such as the bank. In other cases, the lender will advise that you continue the payments in the same fashion. You will continue to be responsible for the mortgage payments even when the existing lender sells the deals to long-standing firms like The Elite Team Supreme.
The repayment agreement will not change. The only difference is that the new firm will assume all previous obligations of the repayment. The Federal National Mortgage Association states that all bankrupt mortgage firms in the United States have a 40 to 60 percent chance of getting new ownership.
What to do if the loan gets ownership by another lender
You should get a notice of the transfer when the loan transfers to other mortgage companies in McKinney Texas. The previous firm will give you a notice at least fifteen days before the due date of transfer.
The effective date of transfer is when the new company begins to process your mortgage loan. The new firm will also notify you within fifteen days of the exchange. Be keen to note the following compulsory details in the transfer notification:
- Name and address of the new lender
- The final date when the outgoing lender will stop accepting payments
- The time when the new lender will begin receiving funds
- The contact details of the original lender’s loan officer
- Updated information on the insurance and an option to state whether you want to continue with the agreement
How to handle the new mortgage agreement
- The good news in a bankruptcy case is that there will not be any changes to the previous deal. Continue making timely payments according to the newly provided details.
- You can confirm the ongoing mortgage agreement by reading the section titled ‘assignment’ in the letter of notification. It will state that the mortgage will remain in force.
- Keep track of the records because the mortgage company will no longer be in a position to provide documents upon request. Salvage any necessary papers if possible, before the firm is entirely out of business. The details will help in proving that you were making payments in the past.
- Confirm the lender's identity before you begin making payments to the new detail by looking for the certifications on the Better Business Bureau. A quick online search will expose other mortgage borrowers in the same predicament. Do not engage without the complete trust of the new lender.
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