What happens to your house payment when your mortgage lender goes bankrupt, broke, or disappears? You need to make your payments as agreed. But what should really happen? I recommend that your house should be free of any debt because the lender was stupid enough to get caught up in a cycle which was foreseeable. If the lender is forced to give away free houses after lending $250,000 to an illegal alien subject to deportation they deserve it.
After all, what happens as the lender is on the ropes? They call the borrower even before a payment is due. The borrower get calls from India at 8 AM on Sunday morning, just to see if you are one of their defaults or if you are really going to make a payment. When that happens at my house that mortgage is the last that one I pay. I certainly do not escalate them to the front of the line. Sometimes I pay the late fee just to see if they can sweat a little more. As long as I don’t go over 30 days late they deserve my subtle passive agresssive attitude. A crisis on their part does not translate to an emergency on my part.
Some of these lenders have shareholders that deserved better than what they got. Investors deserved a degree of fudiciary responsibility and integrity, but instead they had to pull the plug on financing because the lender could not guarantee the risk. DUH? If Maria got deported back to Mexico and Mohammed got deported to Guantanamo did the mortgage company, lender, or broker think that might happen?
Obviously there must be rules and regulations before the homeowner gets a free house out of the deal, otherwise people would do a cash out refinance, while never intending to make a payment. Those people don’t get a free house, because they already sold their house to the mortgage company. Maria and Mohammed don’t get a free house either, because they don’t live in this country any more. But you and I should get a free and clear deed just for putting up with the risk, harassment, and stupidity of our now defunct mortgage company.
If a mortgage lender goes bankrupt, and you have been making your payments on time, you should be allowed to refinance at a low fair rate and receive preferred customer status at a reliable reputable lending institution.