In early July 2025, Discover Home Loans announced it wasn’t loaning anymore. This big player in the home equity financing field, a division of the well-known credit card issuer, stopped offering new home equity loans and mortgage refinances – though it would continue to service its existing loans.

If your home equity lender decides to break things off, don’t take it personally. Just like in dating, sometimes the problem is them, not you. “It’s common and not unusual,” says Tim Rowen, director of customer success at Figure, a home equity lender. “Lenders may pause or exit originations due to changes in their strategy or market conditions such as rates, demand and liquidity.” Or due to a change in ownership, as in Discover’s case: Its parent company was acquired by Capital One, which opted to exit the home-equity business.

The action raises a bigger question, though: How can changes like mergers, new strategies or even bankruptcies affect your HELOC or home equity loan? Here’s what you do and don’t have to do, should your home equity lender stop lending.

What happens to your current HE Loan or HELOC?

Your home equity loan or HELOC isn’t canceled the moment the lender exits the business, merges with another company or goes bankrupt.

“The debt does not disappear,” says Jacob Naig, owner, real estate investor and agent at Webuyhousesdesmoines.com. “The loan terms stay the same as does the legal liability of making payments. The party who is supposed to be paid just changes hands. One homeowner I know saw his HELOC sold during the [2008 financial] crisis to a bank two states away. The statement looked different, but the terms of the contract did not change.”

However, eventually, there are a few things that will happen to the loan. The accounts or assets of the lender are typically bundled and sold as part of the closure proceedings. The sale could be to a bank, credit union, or investor. The lender may also keep the loan but outsource servicing to a third party to handle billing, payments and customer support.

What happens if you’re in mid-application?

If you’ve already applied for a HELOC or home equity loan with the lender, it’s possible that all may proceed as normal: Discover stated it would continue to process in-progress applications, for example. However, there’s no guarantee that this will happen: “If the lender exits before your loan closes, they can stop processing and decline the application,” says Rowen. “You’d typically need to reapply with a different lender.”

What if you closed on the loan or line of credit and haven’t yet received funding? That’s different. “They are still obligated to fund unless the agreement includes conditions they can use to cancel, like an employment change, title issue, or fraud,” says Rowen.

Do you still have to make payments?

Absolutely. Regardless of who owns or services the loan, you must make payments per the original schedule.

“My advice is always, if you’re unsure, make your payment to the old lender,” says Jacqueline Salcines, head of her own real estate, mortgage and banking law firm based in Miami. “The old lender is always going to forward it to the new lender until everything gets squared away.”

The key is not to ignore any notices you receive in the mail. Salcines recalls clients who received letters about a shift in lenders and thought they were scams. “I would reach out to both lenders,” she suggests. “Reach out to the old one just to make sure that the notice is legitimate. Then I would reach out to the new one just to make sure that you’re in their system and where new payments should be going.”

Given the potential confusion, a 60-day grace period for late payments does exist in these situations (more on that below).

What consumer protections do you have?

Understanding the laws around home equity loans can be confusing, especially when a lender exits the business.

“The Truth in Lending Act (TILA) requires that consumers be notified when the ownership of their mortgage changes hands,” states Andrew Pizor, senior attorney at the National Consumer Law Center. “This law applies to any mortgage secured by a consumer’s principal dwelling” – which includes HELOCs and home equity loans, as both are technically second mortgages. As per the law, you must be notified 30 days before the transfer.

However, as Pizor notes, owning and servicing are two different animals. This is where things can get a little tricky. Even if your loan changes hands, the company that services it may remain the same – or it may not. If it does change, you’re supposed to receive a notice at least 15 days before the transfer.

And if you miss the memo and pay the wrong servicer? You’re allowed a 60-day grace period for late or misdirected payments under the Real Estate Settlement Procedures Act. “The idea behind the 60-day rule is that it might take a couple of months to straighten things out after a transfer, and it’s not the consumer’s fault,” says Pizor.

However, some of these protections don’t cover HELOCs. As Rowen points out, HELOC lenders aren’t legally obligated to give you a 15-day notice before your loan is transferred to a new servicer. The same goes for the 60-day grace period for misdirected and late payments. That said, many lenders and servicers do follow the rules voluntarily.

“If HELOC borrowers find a mistake during a transfer or at any time, they have the same dispute rights as with a credit card,” Pizor says. If a payment you made wasn’t applied correctly, check your statements for a way to report a problem. If that doesn’t work, Pizor suggests contacting your state regulator or representative.

Another option? Reach out to the Consumer Financial Protection Bureau (CFPB), though he admits that could be more difficult due to the ongoing rollbacks there. “And if all else fails, [you] may have the right to sue,” Pizor adds.

Can your terms change if the home equity loan is transferred or sold?

No, the new lender and servicer are legally bound to honor all the terms and conditions you originally agreed to with your home equity loan or HELOC. That includes repayment schedule, borrowing limit, term length, interest rate. However, what does change is:

• Where you send your payments: Your monthly payments may need to be sent to a new address or processed through a new online portal.
• How to access your account: You may need to create a new online login or use a different system to view or access your account information.
• Who to contact for questions or service: Customer service will now be handled by the new servicer, so you’ll need to reach out to them for inquiries, billing issues, or other support.

Tips for navigating your new lender

It can be confusing when your HELOC or home equity loan changes hands. These tips will keep you stay on top of payments and keep your loan on track:

• Keep an eye on your mail and email. Look for notices about servicing transfers. Contact both your old and new servicer to confirm the validity of the change.
• Note new payment details. For the initial months, keep a close eye on if and when payments are processed. Keep records of all payments made. If you have autopay, make sure you transition it to the new lender/servicer.

• Save all documentation. Keep your original loan agreement handy, to confirm no changes to the terms have occurred.
• Stick to your repayment plan. Even if the company changes, your financial obligation doesn’t. Make sure you make all payments in full and on time.

• Reach out when in doubt. If you’re unsure about what the changes mean, contact your current lender first, as you already have a business relationship there. Even if it no longer exists, it should provide contact info or some sort of hotline.

Final word on home equity lenders exiting the business

It can be inconvenient if your lender stops offering HELOCs or home equity loans. But rest assured: even if the servicer or brand goes away, the original terms of your loan stay the same. However, what might change are the logistics, like where you send your payments. So stay alert, keep paying on time, and don’t let the change throw your budget or finances off-track.