If Paragon ( Mortgage Lender ) cesase trading or goes bankrupt what happens to the people who have mortgages?with them specifically with respect to interest levels on their accounts |
If Paragon ( Mortgage Lender ) cesase trading or goes bankrupt what happens to the people who have mortgages?with them specifically with respect to interest levels on their accounts |
Absolutely nothing changes. On your closing documents, there is a note rate which represents your current rate based on the terms of your loan - that is what you're responsible for honouring. If you are in a 30 Year Fixed, the payment will not change. If you are in an ARM, then most likely your rate will change when the fixed period expires.
When banks go bankrupt, it doesn't mean that they close up shop and go away. There are several lucrative parts that consist banks, and one of the most lucrative is the servicing departments that are responsible for maintaining and updating your mortgage account and statements. If the bank chooses to sell off the loan due to their position, they can sell off that loan either at a premium or discount. This is solely the lender's liability - NOT yours. Loans are sold off in pools from one investor to the next, not individually - and currently, alot of this paper is not being traded in the secondary market - so it is quite unlikely that your loan will be sold off to another investor in the near future.
Your loan can have two things happen to it:
1. Paragon continues to service the mortgage.
2. Paragon sells off the mortgage note to another investor - who will notify you of a change in servicing of the loan, and you will remit your payments to them instead of Paragon.
Ignore what CNBC is saying, and pay attention to your mail.
Your loan will be sold to another bank, when and if the paragon goes out of business. Make sure you keep records and make all your payments. If your mortgage is sold to another company, the loan agreement remains the same as what you had. The only change that may take place will be your escrow account if you have one. (this is used to pay your taxes and insurance). Sometimes when your loan sells the new lender requires an increase in the escrow account. Keep good records. keep all paid checks to the mortgage company in case the new lender doesnt have accurate records from the current one.
The interest rates are specified in the loan papers when you signed them. Another company will buy the assets (loans) of the company and they will notify you.
You'll just make the payments to the new company and the terms of your loan will remain the same.
Don't stop making your loan payment. Keep records, just in case.