If a non-bank lender goes bankrupt, it generally does not mean you will lose your property. Here’s what typically happens in such a situation:
- Servicing of the Loan: If a non-bank lender goes bankrupt, another financial institution or a third-party servicer will usually take over the servicing of the loan. The terms of your mortgage agreement remain the same, and you continue to make payments as per the original agreement.
- Transfer of Loans: The non-bank lender’s loan portfolio, including your mortgage, is usually sold to another lender. The new lender will then become your mortgage servicer. They are obligated to honor the terms and conditions of your existing loan agreement.
- Legal Protections: Borrowers are protected under various laws and regulations. For instance, in many jurisdictions, mortgages are secured by the property, meaning that as long as you continue to meet your payment obligations, your ownership of the property is not at risk.
- Communication: You should receive communication from the bankrupt lender or the new servicer about where to send your payments and any changes to the servicing of your loan.
To ensure you are well-protected, it’s a good idea to keep thorough records of your mortgage payments and any communications from your lender. If you have concerns, consulting with a financial advisor or a legal professional can provide additional peace of mind.