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What happens to mortgage if bank goes belly up?

Started by kimerama
almost 18 years ago
Posts: 158
Member since: May 2008
Discussion about
So if you have a mortgage from a bank that goes under I know you obviously still owe the outstanding balance and that a new bank picks up your note, but can they give you any interest rate they want? Like what's a borrower's protection in that scenario (which I guess has happened to a lot of people but I can't really find the facts on consequences of that).
Response by Special_K
almost 18 years ago
Posts: 638
Member since: Aug 2008

Nothing changes with your mortgage if the issuing bank goes under. First of all, in most cases, the bank in question no longer even owns the mortgage. They are simply servicing it (so sending bill, handling payments, etc.). Second, even if they did own it, it's an asset on their balance sheet and without getting into all the sordid details, bankruptcy doesn't change any aspect of that. You still owe the outstanding amount at the agreed upon rate.

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Response by kimerama
almost 18 years ago
Posts: 158
Member since: May 2008

ah ok thanks.

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