“Navigating Mortgage Payments During Bank Failures”

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Do You Have to Pay Your Mortgage if Your Bank Fails?

Yes, you must continue making mortgage payments even if your original lender fails. Your loan does not disappear. The Federal Deposit Insurance Corp. (FDIC) will notify you in writing about temporary payment arrangements. If your mortgage is sold to another lender, either the FDIC or the new owner will inform you of the transaction and provide payment instructions.

What Happens to Your Mortgage?

When your mortgage lender goes out of business, the terms and conditions of your loan, such as the interest rate and payoff period, remain unchanged. Automatic payments should continue as normal. You will not face immediate foreclosure unless you are already seriously behind on payments. The new lender must comply with all state and federal laws regarding the ownership and servicing of your loan.

How to Stay Current on Your Mortgage Payments

If your mortgage is transferred to another lender after a bank failure, follow these tips to stay current on your payments:

• Continue making payments as instructed by the FDIC or the new owner.
• Pay attention to all correspondence regarding the status of your mortgage.
• Contact the FDIC or the new loan servicer if you have questions or concerns.
• Ensure you know whether the company servicing your loan is changing. If so, you may need to adjust how and when you make payments.

The Bottom Line

It can be unsettling if your mortgage lender fails, but federal and state laws protect you. Remember, you are still responsible for making timely loan payments. Your bank may have disappeared, but your loan has not. Continue making payments on time to protect your credit score.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We are here to assist you with all your mortgage requirements.

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