When your lender goes out of business

NEW YORK (CNNMoney.com) -- A number of subprime mortgage lending companies are taking a hit to their profits or facing bankruptcy. Here's what you need to know if your mortgage lender goes out of business.

Regardless of what kind of trouble the mortgage company may be in, you still need to send in your payments on-time, says Greg McBride of Bankrate.com.

Remember, your payments are considered an asset to the company. If a lender declares bankruptcy, those assets will just be sold to another lender. In most cases, government sponsored enterprises like Fannie Mae (Charts), Freddie Mac (Charts) or Ginnie Mae will handle the transfer. But rest assured, there will be someone who wants to get your monthly check.

The terms of your loan should always stay the same, no matter who holds your loan. It's important that you thoroughly review the details of your mortgage agreement. The interest rate and the type of loan you get should not change.

If your lender does sell your mortgage, you should receive a letter from the company within 15 days that outlines the new mailing address and payment deadline. You should also be given a toll-free telephone number that you can call if you have any questions.

You must get a grace period of 60 days to get your payments to the right place on time. If you have any complaints or issues, write a letter to your lender. The company is required to respond within 2 months of getting your letter.

If you have paid off your loan in full and you want a mortgage satisfaction document from the company when it's no longer in business, go to your State Attorney's General office. There you can find out the status of the company says Bill Glavin of the U.S. Department of Housing and Urban Development. You should be able to find out who you can contact.

Even if you have no problem making your monthly mortgage payments on time, this environment is likely to hurt you. To curb their risk of defaults, lenders are tightening their borrowing standards. So, refinancing may be a whole lot harder. If you're just on the cusp of qualifying for a loan, take a look at your credit history and see how you can improve your score.

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