Mortgage Advice: Selling Loans
Can my loan
be sold? What happens if my lender goes out of business?
Your
loan can be sold at any time. There is a secondary mortgage market in
which lenders frequently buy and sell pools of mortgages. This secondary
mortgage market results in lower rates for consumers. A lender buying
your loan assumes all terms and conditions of the original loan. As a
result, the only thing that changes when a loan is sold is to whom you
mail your payment. If your loan has been sold, your existing lender will
notify you that your loan has been sold, who your new lender is, and
where you should send your payments from now on.
If
your lender goes out of business, you are still obligated to make
payments! Typically, loans owned by a lender going out of business are
sold to another lender. The lender purchasing your loan is obligated to
honor the terms and conditions of the original loan. Therefore, if your
lender goes out of business, it makes little difference with regards to
your loan payments. In some cases, there may be a gap between the date
of your lender's going out of business and the date that a new lender
purchases your loan. In such a situation, continue making payments to
your old lender until you are asked to make payments to your new lender.
