What can you do if your mortgage lender goes bust? While they might appear infallible, it’s not unheard of for a home loan lender to go bankrupt. What happens to your mortgage if your home loan lender goes bust? What you might not expect, however, is that you’ll probably soon have a new mortgage lender. If a lender collapses, its loan book – including your mortgage – will usually be sold to another bank or lender.