The topsy-turvy condition of the financial market, compels a number of debtors to worry about their future and wonder what will exactly happen to them if the mortgage lenders goes bankrupt? Will your loan terms drastically change? Or you have to renegotiate the loan with a new lender? To most of the consumers the secondary mortgage market appears to be a mystery and they don’t know the right answers of all the above questions. Read on to know more in this regard and take a look at the changes you might encounter when the mortgage lender is forced to be declared bankrupt.
After signing the mortgage deal
- No matter if you have done your mortgage or mortgage refinance with Wells Fargo or Bank of America the lenders can sell the loan to investors on the secondary mortgage market. The moment the borrower signs his or her loan documents he has no role to play in this regard.
When mortgages get sold
- Once the mortgages are sold, fairly they’re divided into two major parts, the first part is the actual mortgage itself and the second part which is sold is the servicing rights. The first portion is attached with a bunch of other mortgages and sold to an investor in the form of bonds or some kind of investment vehicle. Once you sold the first portion of the mortgage the payment you make to the company servicing your loan, small percentage of your payment is accepted by the company and the rest of it is paid to the investor. The second portion of the mortgage is paid to the company which will hold the servicing rights to your mortgage and handle all the administrative tasks that come with servicing your loan, like sending out statements, collecting past due payments and so on.
When the Original Lender Goes Bankrupt?
When your original lender file for bankruptcy after selling both the mortgage and its servicing rights, you remain no more obligated to pay them but if they keep the servicing rights and sell off just the mortgage as an investment vehicle, they will be compelled to liquidate its assets, which means they have to sell the servicing rights to someone else. Once the servicing rights are sold, the change you’ll first notice is that the company you are currently paying has been changed.
What happens if the Servicing Company declares bankruptcy?
If eventually the company which presently holding the servicing rights goes bankrupt? Same procedure will be repeated. The company will be forced to sell the mortgage servicing rights at a discount to another company or investor and you’ll start paying to yet another new company.
What happens if finally the investor declares Bankruptcy?
Have you ever given a thought what will be the consequences if the investor who bought the actual mortgages itself, as some sort of investment vehicle, goes bankrupt? Don’t worry most probably you won’t even know about it. No matter what happens to the mortgage, the company might sell it to some other company or might lose it in a lawsuit, either way; your loan terms will remain unaffected.
To conclude, no matter what happens, no matter how many times your loan is sold or how many companies holding it go bankrupt, the terms of your mortgage will never be changed or modified in any way.
When you are looking at moving, and see a house you like, make sure that you consider as much as possible about the surrounding neighborhood. Some critical things to keep in mind are where your kids will attend school (whether public or private, because public schools have zones that must be considered), the strength of the local economy, if there is a major airport or train station nearby, and what the crime rates are in the area.
Carla Hill explains more in this recent article:
Before you get started on your home based business, you need to make sure you have these 3 things in your pocket, or you are destined for failure. I want you to be successful, and I really think this will definitely help you to get there a lot sooner than just going it alone.
You see, running a business isn’t all just fast cars and going on vacation, it does require a little bit of yourself before you can get there. So take a look at this podcast and give me your feed back below.
Today’s video is all about setting the stage for you to have a successful home based business. There are 3 major things that you must possess if you are going to have a successful home business. With the right tools and mindset, you can make it on your business, and get out of that full time job once and for all!
Please leave any questions or comments that you have…
It probably comes as no surprise, but home sales in the Orlando market have been affected just like the rest of the real estate market in the US. According to the World Property Channel, sales in this area are down 9.6%, prices are down 5%, and the inventory of homes on the market is down 27%.
Pretty staggering numbers, but again, I expect to see numbers like this given our current national real estate market, lack of available financing, and lack of able buyers.
You can read more this subject by clicking here.
This is a great story. Apparently, a Florida based real estate company had a piece of property that was continually being penetrated by burglars. In the story, the company decided to put an end to it. So they hired a former marine to guard the house, and he ended up pepper spraying and chasing away the thieves!
Strike one back for the good guys…My only question here is, where were the cops?
You can catch the full story here:
According to a recent article on CNN money, the number of delinquent commercial loans has risen from 8.02% in April 2010 to 9.65% in April 2011. On a percentage scale, that is a 20.3% increase in delinquencies.
So when you are a small bank and a large amount of your revenue is generated from these type of loans, that spells some real trouble. Many of these local banks to not have the deep pockets that the large institutions have, and they are much more susceptible to default.
Sadly, these banks tend to be the best banks out there in terms of customer service, products and pricing. I am a member of just such a bank in my local area, and some of the things they that have done for me were totally unheard of with the national chains.
According to James Kimmons, he belongs to an MLS system that mandates inclusion in the National Association of Realtors (NAR). As an agent myself, I know the crushing and frustrating pull of these kind of financial anchors.
You need to have access to the MLS, but you don’t want to pay for anything else. And on top of that, the NAR forces an annual fee of $40 for political non-sense.
You can read the full story here:
Short sales are definitely a hot topic in this terrible real estate market, but what happens when the owner is a foreigner?
I hadn’t thought about this before, so when I ran across an article on ActiveRain, I thought you would be interested as well. The basic premise is that the feds want to ensure they get their money, so they require a 10% withholding on the money, to ensure it doesn’t leave the US, never to return.
The problem is, the bank will often deny the short sale if this withholding occurs. So what do you do? Click here to see some options.
There are many inexpensive things that you can do to increase the curb appeal of your property, or your client’s property. For starters, simply keeping the grass mowed, power washing the exterior and mulching the areas where grass won’t grow really helps to increase the “face” value of the property you are selling.
Kristine Ginsberg goes on with some more things you can do very, very cheaply to give the exterior of your home a fantastic face lift. You can check it out here.