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What happens to the mortgagee if he files voluntary bankruptcy?

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βˆ™ 2008-12-04 19:29:28

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Assuming this is a straight bankruptcy, the mortgagee would lose the money that is owed to it on the mortgage loan. A bankrupt person or corporation loses all of his/her/ its assets to the Trustee in Bankruptcy so that the Trustee can liquidate those assets and distribute the net proceeds to the creditors. The mortgage loan is an asset which is then sold to the highest bidder along with the mortgage lien. The mortgage holder will now make the mortgage payments to whoever purchased the mortgage loan from the bankrupt estate. The mortgagee is left with nothing.

2008-12-04 19:29:28
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