What happens when your mortgage holder goes bankrupt?

[ljm2002]

I ask because I refi'd several weeks ago, then attempted to pay my mortgage to the new outfit, only to find out they had gone bankrupt. Taylor Bean & Whitaker, which apparently was the 3rd largest mortgage company until recently. They were not answering the phone, nor responding to emails, and my payment sent via the post office came back refused.

So then I got a letter from some other outfit, Colonial Bank, saying they now held the mortage; but when I called them they were operating under a new name, DBMT, and directed me to the FDIC site (www.tbwloansearch.com) where I could plug in some info on the original loan to TBW, and they'd tell me who my real mortgage processor is. (the letter from Colonial Bank turned out to have been sent "in error"; er, okay...)

So now I have the name, address and phone number of yet another potential holder of my mortgage, RoundPoint (a name that makes about as much sense as SquareCircle, but I digress), but I haven't called them yet.

My question is this: assuming the new mortgage holder bought the bankrupt assets, wouldn't they have paid only a percentage of their face value? I really want to call them and ask them how much they paid for my mortgage, and if they would be willing to share some of that markdown with me.

Anyway I just wanted to tell my sad tale, where I can't get the original holder to take my money, and can't find anyone else so far to make my payment to. Ah, if only I could work it to my advantage and have the mortgage amount lessened to something more closely reflecting what they paid for it... I know, I know, dream on.

(on edit, corrected "the letter from the other outfit" to "the letter from Colonial Bank" for clarity)

[AllentownJake]

1. Things you should do

1) Tell them you want to pay off your mortgage but before you do, you want to see the clear and free note and title.

2) They aren't going to share anything with you, and the fact that you are paying is going to result in them not wanting you to pay off the balance. You'll be taking a paying asset off their balance sheets.

3) As in all transactions, consult with a lawyer.

[ljm2002]

6. Yes on the lawyer...

...I think I'll bite the bullet and consult one. Who knows, could work to my advantage. Usually I don't think in those terms, but after weeks of tearing my hair out and having mortgage companies evaporate before my very eyes, whenever I try and make a payment -- it's just a really weird feeling to not be able to make a payment, and I don't want some ding on my credit report because of it.

[AllentownJake]

8. At the end of the day

Whoever is holding your mortgage, has an army of lawyers in their corporate offices. It might cost a few bucks but it is worth it for you to consult with one yourself.

[dugaresa]

2. try calling and asking for the deed to your house since you paid the mortgage off

perhaps in this kerfluffle they messed up their records! wouldn't that be a hoot?

i do feel bad for your situation though because you don't want to end up getting caught in some sort of mess as a result of this

[ljm2002]

7. Ha ha, worth a try!

...but I think I will talk to a lawyer first.

[SoCalDem]

3. EVERY time your mortgage gets "sold", it's bought by the "new" people

for less than the face value you are on the hook for.. This is why the bail-outs should have gone NOT directly to the banks, but to homeowners whose homes suddenly lost value.. It could have been in the form of "coupons" negotiable by the banks when presented for payment..

let's say your house had a $100K mortgage and was suddenly only worth $85K, your "coupon" would have been worth $15K. Of course these coupons would have to have strings attached to them..like maybe you could not sell the house for a specified time to capture that as profit, and when you did sell, the govt could reclaim part of it if the value went beyond the 15% they reimbursed you, but it would have still gotten money into the banks, but it would have also reduced YOUR debt, and would have removed a lot of "toxicity" from the banks at the same time.

The way they do it now, is terrible for homeowners.. they "sell" your $100K mortgage for $50K and you are still on the hook for $100K to the "new people". If the banks know that your mortgage is only worth$50K and they are willing to dump it to another company, why not negotiate directly with YOU? Because they are all skunks, and don't care about the people they call "customers"

[ljm2002]

9. I agree with everything you posted here...

...and it chaps my hide too. But in this case, I'm thinking, hey maybe I could work it to my advantage this time.

You know the old saying, "Hope springs eternal"...

[ashling]

4. When a lender goes bankrupt the

assets will be sold by the trustee. Your mortgage is an asset. I would try and get hold of the trustee to find out who got the assets

[marybourg]

5. And of course, keep every piece of paper, including envelopes,

relating to these assertions of interest in your mortgage. Also, notes of all phone calls and copies of letters you send. I speak from experience. My records were all that existed to show who purported to hold my mortgage when my mortgage holder failed and the new mortgage holder never filed his interest with the county as was required and the buyer's new mortgagee didn't want to close without documentation showing whom was owed and how much.

[dixiegrrrrl]

10. There is a possibility no one has legal ownership of your mortgage

so the first thing you, or a lawyer, would do is check the mortgage owner trail in the county of the original mortgage ( yours) to see if there was legal transfer EACH time the mortgage got sold.
I f you Google recent news stories about MERS, you will find that some judges have held no foreclosure can be allowed because of invalid mortgage transfer processes.
Who knows ...you could actually end up proving no one owns your mortgage. Some people have already done this.

[marybourg]

20. I guess my writing is less clear than I thought it was. "The buyer"

is the person who bought my house. His new mortgagee needed to pay off my mortgagee out of the house sale proceeds and only knew who to pay off because I had kept all the paperwork. Without that paperwork the sale would have been held up and since "Black Monday" of 1987 (of which today is the anniversary, I think) occurred a few days later, the sale might have been lost and my retirement canceled before it started. I really dodged the bullet by having kept all the letters and notices.

[ljm2002]

19. I have all the paper so far...

...including the unopened envelope that I sent to make my first payment, that was returned "Refused". I figure if anyone ever tries to accuse me of being late on payments, I can produce that, and since it is postmarked and unopened it is proof that I sent payment in on time in the first place.

[marybourg]

21. Excellent! nt.

[corpseratemedia]

11. I think my s/o has a similar problem.

We got a foreclosure notice from a law firm that represents Wells Fargo. s/o's been working with NACA to get a lower payment on what NACA found to be a predatory loan. The company that s/o made payments to was bought out by Wells Fargo. Now Wells Fargo is saying that payments weren't made, when they were, the mortgage co. took the payments, but s/o was not notified that payments needed to be made to this other co. now owned by Wells Fargo. Confusing, since there was no notification of change until several months later. Then s/o calls Wells Fargo, their foreclosure dept., and they say the foreclosure notice that is signed and stamped by the law firm, which I signed for certified, isn't really a foreclosure notice - even though it says it's a foreclosure notice. So s/o is going to an attorney this week. How can there be foreclosure when there is no delinquency? Who has the obligation to notify change of mortgage ownership when the old co. is still accepting/cashing payments?

It just reeks.

[AllentownJake]

14. These firms have been so consolidated

Over the past year as companies fail that no one knows what the hell is going on.

[ljm2002]

15. Eeek! That sounds scary!

I'm more than a little unnerved, lemme tell you, with the vapor trail that has appeared in place of my mortgage.

It amazes me to realize I am not terribly shocked by these events. Bemused, unnerved, but not shocked. Another day, another big lender goes belly up... Yawn. Papers get filed somewhere, bits and bytes fly around the ether, and where they land, nobody knows.

Good luck to your s/o, at least no one is claiming to foreclose on me... yet. (knocking on wood)

[Trocadero]

12. Ask a title company (easiest to use the one who did your original closing)

to check the public records for any documents pertaining to the mortgage recorded after closing, such as an assignment of the deed of trust

[Trocadero]

13. call the Attorney General's office of your state and tell them you are getting

the run-around

[ljm2002]

16. Thanks, I just may do that...

...I really appreciate all the good advice from fellow DUers.

[CK_John]

18. You don't want your furishings to end up on the front lawn. Also contact FDIC. n/t

[MindandSoul]

17. Does any one (except for you) have the title of your home?

I wonder if you should request to view a copy of the title on your home (or mortgage) before you pay anything. . .to make sure you are on the "right side of the law" you could place your normal "mortgage payments" in an escrow account. . .waiting for the proof that SOMEONE has the title on your home.
And if they cannot produce that title. . .I wonder if you could have some recourse?
Just an idea. . .It might be worth checking into it!