What happens to a borrower if the bank that holds their mortgage fails?

Question

I've seen alot of media about what happens to deposit accounts with banks that fail (FDIC insurance) but what about those people who have credit accounts with those banks?

The bank that holds my mortgage is different from the one that I uses for checking and savings and I'm certain that everything is FDIC insured as far as my income but what happens if my mortgage lender fails?

will my mortgage be sold? would there be a forclosure?

What a happens?

BTW my mortgage is in good standing right now. Thankfully

Answer 1

Ah, you are in the right position.  The worst that will happen is your mortgage will be sold or assumed by another institution.  That does nothing to change the terms of the mortgage.  You are fine!  

While you can relax that nothing terrible is going to happen, it would behoove you to watch your statements if the loan transfers to another party.  It is not unusual for there to be a delay in posting payments.  Be sure you are not charged a late fee.  Keep good records of when you mail your payments.  If you pay online or automatically, you will have a good record.

You are on the right side of this dismal situation.

Answer 2

Nothing.  The loan will be assumed by another lender.  No change in terms.

Answer 3

A mortgage is a contract - nothing will change on your mortgage. Yes, it will likely be sold/serviced by someone else soon, but all terms of the original contract will remain the same. Foreclosure ONLY happens when payments are not made. You have nothing to worry about!