With all the turmoil in the housing industry recently several of the major lenders have had to declare bankruptcy. If one of those lenders was yours or in the future your lender does declare bankruptcy here are a few tips about what you should do.

First, keep in mind that you are protected under federal law. However, that doesn’t mean you can stop making your payments. Even though the original lender may be out of business the payments are still due. The lender may choose to sell the loan or continue to service it, but either way the payments will be collected in trust. If you don’t pay then you risk having a late payment on your credit report.

Your original lender should contact you and let you know where to begin sending the payments. This letter will include your loan number, the payment amount and the interest rate. Even though you’ll have a new lender your payments will not increase. Your original loan terms will not change.

During the transition from old lender to new it is important to be aware of potential scams. Read any emails or regular mail, watching for any changes in your lender, late payments reported or payments that weren’t received. Before you send any payment to a new lender call them to confirm it’s the correct lender.

Also, you will receive two letters notifying you of the change in lenders - one from your new lender and one from the old. Unless you receive both the change isn’t official. These notices will include the name, telephone number and address of the new loan servicer, the effective date your old lender will stop accepting payments and the date your new lender will begin accepting payments.

Finally, you must be notified at least 15 days prior to the effective date of the transfer. You do have a 60 day grace period after this transfer where you can’t be charged late fees if you send your mortgage payment to the old lender by mistake.

If you were just approved by a lender that is going bankrupt, call and ask if they intend to honor your approval. If not, start shopping around again as soon as possible.