What If Your Mortgage Lender Goes Bust

That owner could be another lender, or it could be a private investor -- mortgages are often bundled together in a process called securitization to serve as collateral for other kinds of debt. In either case, you have to keep making payments.

If the original lender still holds the mortgage, two things can happen.

The lender could decide that, while it won't take on any new loans, it will just continue to service existing loans like yours. In that case, just keep making your payments.

A lender in dire straits might also try to sell some or all of the loans to raise some cash. That means you'll be writing your monthly mortgage check to someone else.

Bottom line: Regardless of what happens to your mortgage company, your loan does not go away. Keep making your payments, even if it is to a new address.

Now Run for the Hills

Even if you're not off the hook for your mortgage, the minute you hear your lender is in financial straits, you might want to start shopping around for another loan.

If your mortgage company does try to sell your loan, your paperwork could get juggled, you might not get the new billing address in time, and then your mortgage payment will considered late, says PeggyAnn McConnochie, vice president of the National Association of Realtors.

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