If your Mortgage co. goes belly up...?

[Summerwind]

Okay,

I am beginning to see that the stock market reaction to bad mortgage policies is serious and real and going to effect most everyone. So here is a question that has been running through my head since this all started.

What if your mortgage is "owned" by one of these companies that goes belly up, does that mean you are no longer obligated to pay? Is it more likely that some other financeer will buy any of the remaining "good" loans?

My mortgage is consistently bought by ABN-Amro, no matter who I refi through. I am "stated income" but have always paid on time and have a great credit rating. But it seems I heard ABN was under the gun. I know that all mortgages come with clause saying the lender can demand full payment at their discretion; I am afraid that they will be demanding full repayment from folks like me to cover folks that didn't make it.

Any opinions or better yet knowledge regarding this issue?

 

[Iriemon]

Okay,

I am beginning to see that the stock market reaction to bad mortgage policies is serious and real and going to effect most everyone. So here is a question that has been running through my head since this all started.

What if your mortgage is "owned" by one of these companies that goes belly up, does that mean you are no longer obligated to pay? Is it more likely that some other financeer will buy any of the remaining "good" loans?

My mortgage is consistently bought by ABN-Amro, no matter who I refi through. I am "stated income" but have always paid on time and have a great credit rating. But it seems I heard ABN was under the gun. I know that all mortgages come with clause saying the lender can demand full payment at their discretion; I am afraid that they will be demanding full repayment from folks like me to cover folks that didn't make it.

Any opinions or better yet knowledge regarding this issue?

That would be nice wouldn't it?

The assets of these companies (ie your mortgage) will be sold in bankruptcy liquidation of your mortgage lender to another company at a discount. You will be obligated to continue to make payments to the new owner of your mortgage.

 

[Spartacus FPV]

In fact buying debt is a lucrative trade

 

[Iriemon]

In fact buying debt is a lucrative trade

I'm not sure "lucrative" is an applicable all purpose adjective at this particular moment of time. : )

 

[Summerwind]

I guess so, its lucrative.

So you don't think the bankruptcy court or the mortgage company would create the need for immediate repayment of debt of full?

I sailed throught the last financing even with stated income because of my credit rating; but if I am forced to re-fi; not only will my fixed rate climb pretty high, but I am hearing that stated income mortgages are no longer to be had.

 

[Iriemon]

I guess so, its lucrative.

It's not very lucrative if a bunch of the mortgage you bought go into default status.

So you don't think the bankruptcy court or the mortgage company would create the need for immediate repayment of debt of full?

Do you mean would you as the borrower have to pay it in full? No (not unless you otherwise default) you are under no greater obligation than your mortgage provides, and I'm sure it does not allow acceleration in the event of sale or transfer to a new lender.

I sailed throught the last financing even with stated income because of my credit rating; but if I am forced to re-fi; not only will my fixed rate climb pretty high, but I am hearing that stated income mortgages are no longer to be had.

You should not have to. But keep making your mortgage payments.

 

[Spartacus FPV]

How capitalistically devilish!

I'm not sure "lucrative" is an applicable all purpose adjective at this particular moment of time. : )

I rather like the idea of owning people's souls.

Now the guy's got Paulie as a partner. Any problems, he goes to Paulie. Trouble with the bill? He can go to Paulie. Trouble with the cops, deliveries, Tommy, he can call Paulie. But now the guy's gotta come up with Paulie's money every week no matter what. Business bad? **** you, pay me. Oh, you had a fire? **** you, pay me. Place got hit by lightning huh? **** you, pay me."

Its like buying money! Ol Skool! You just have to have alot of it to get started.

 

[Summerwind]

Well, I must've had some sort of ESP. . . guess what showed up in today's mail. . . .

ABNAmro has sold my loan to CitiMortgage. That's a first. Usually my loans are bought by ABNAmro and stay there till I've refi'd, then they buy it again within six months.

So I guess that answers my question, huh? Kind of like businesses selling their Accounts Receivables when they need cash now. I wonder how much on the dollar they got for my loan.

 

[Spartacus FPV]

Well, I must've had some sort of ESP. . . guess what showed up in today's mail. . . .

ABNAmro has sold my loan to CitiMortgage. That's a first. Usually my loans are bought by ABNAmro and stay there till I've refi'd, then they buy it again within six months.

So I guess that answers my question, huh? Kind of like businesses selling their Accounts Receivables when they need cash now. I wonder how much on the dollar they got for my loan.

I'm sure there was a bidding.

 

[danarhea]

In fact buying debt is a lucrative trade

Lucrative but risky. I remember, back in the 80's, when Towers Financial Corporation bought up unpaid accounts receivables (all over 90 days out) from a great number of companies, then used these uncollectables as collateral when they tried to buy the Washington Post. They were indicted. LMAO.

 

[Cold Highway]

Okay,
What if your mortgage is "owned" by one of these companies that goes belly up, does that mean you are no longer obligated to pay? Is it more likely that some other financeer will buy any of the remaining "good" loans?

This is actually a real good question. I would think there is a bank that the mortgage company deals with so I would assume that your mortgage would be transfered to them. The corporate bankruptcy laws constantly change so who knows if you would have to pay up or not. The most likely situation is another bank might consider buying up all of the outstanding morgages and you would just end up paying that bank but who knows.

 

[Summerwind]

This is actually a real good question. I would think there is a bank that the mortgage company deals with so I would assume that your mortgage would be transfered to them. The corporate bankruptcy laws constantly change so who knows if you would have to pay up or not. The most likely situation is another bank might consider buying up all of the outstanding morgages and you would just end up paying that bank but who knows.

Turns out that is exactly what happened but before any bancruptcy filing from ABN-Amro. But everytime I sign a mortgage or a line of equity I shudder because of that one clause that essentially says that at any time the lender can demand payment in full. Of course I am always told it would never happen if I didn't do something wrong like fail to pay; but it doesn't have limits like that expressed so I was briefly quite worried. It has been handed over to another bank and this months payment went to the new bank so I think I'm okay.