Finance
A Minnesota homeowner's mortgage is serviced by a company that went bankrupt. What happens to the homeowner's mortgage?
AThe mortgage is cancelled since the servicer is bankrupt
BThe servicing rights are transferred to another servicer, and the homeowner must continue paying✓ Correct
CThe homeowner can stop paying until a new servicer is identified
DThe bank that originated the loan automatically takes over servicing
Explanation
When a mortgage servicer goes bankrupt, the servicing rights (a valuable asset) are typically transferred to another servicer. The underlying mortgage obligation is unaffected. Homeowners must continue making payments to avoid default; they will receive notice about where to send future payments. The Consumer Financial Protection Bureau oversees mortgage servicing transitions to protect borrowers.
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