June 7th, 2008 12:37 PM by Sam Kader
When lender goes bankcrupt, the company which goes under court supervision would sell the assets and use the proceeds to repay its creditors. That means that your loan would be sold to another financial institution. While it's possible that the original bank still has the mortgage, most lenders simply originate loans, package them together and sell them to a bank in a bundle. In many cases, the bank repackages a group of bundles and sells them to the securities markets as mortgage-backed bonds or other complex financial instruments. In the end, whoever holds the loan is till going to have to honor the terms of the contract. Vise versa, you - the borrower still needs to pay your loans to either servicing agents or banks.
As of last summer, Washington has 1200 independent mortgage brokers and according to estimate, a third may not survive the turmoil if their balance sheets are not strong enough. Borrowers with solid credit ratings and employment history with strong liquidity are not affected as much as borrowers seeking Alt-A or subprime mortgages.
In Washington as of June, 6% of Washington mortgages were subprime adjustable-rate loans compared to 6.6% nationwide. Of those Washington mortgages, 8.75% were delinquent in the first quarter, compared with 13.87% nationwide.
Top 20 Alt-A Lenders in 2006
# Lender State Status Alt-A in billions
1. IndyMac CA (Fed Supervision 7/1/08) $70.15
2. Countrywide Financial CA Still in business $68.00
3. Residential Capital Group MN Still in business $44.00
4. EMC Mortgage TX Still in business $28.27
5. Washington Mutual WA Still in business $25.30
6. Aurora Loan Services CO Cuts to services $19.40
7. GreenPoint Mortgage Funding CA Out of business $18.30
8. WMC Mortgage CA Still in business $17.70
9. First Magnus Financial AZ Out of business $13.32
10. Impac Mortgage Holdings CA Still in business $11.57
11. Sun Trust Mortgage VA Still in business $10.09
12. Chase Home Finance NJ Still in business $9.40
13. National City Mortgage OH Still in business $8.74
14. CitiMortgage MO Still in business $8.22
15. New Century Financial CA Bankcrupt $8.10
16. First Horizon Home Loans TX Still in business $7.25
17. American Mortgage Network CA Still in business $6.61
18. PHH Mortgage NJ Sold $6.50
19. Taylor, Bean & Whitaker mortgage FL Still in business $6.27
20. American Home Mortgage NY Sold $5.24
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