What happens to a mortgage if the lender goes bankrupt?
Countrywide might own your loan, service your loan, or both. In either case, if Countrywide were to go bankrupt, it would continue to hold and/or service your loan for a period of time, and then it would sell your loan and/or loan servicing rights to some other financial institution. Bankruptcy and post-bankruptcy sale does not create or increase any right to call an ordinary mortgage. However, if your loan is already callable, the bankruptcy, or the whim of the buyer out of bankruptcy, might trigger a decision to call that might not have been made otherwise. Note that if you have some exotic financing which might technically include lease or other contract elements, bankruptcy could create some rights that didn’t exist before…
