If My Bank Fails! What Happens To My Mortgage?
For many people, their mortgage is the largest financial commitment they will ever make. It’s not uncommon for homeowners to worry about what would happen to their mortgage if their bank were to fail. In this blog post, we’ll take a closer look at what happens to your mortgage if your bank fails.
First, it’s important to understand that if your bank fails, it will be taken over by a government agency or a private sector bank. The government agency responsible for bank failures in the United States is the Federal Deposit Insurance Corporation (FDIC). The FDIC is an independent agency of the federal government that was created in 1933 to provide insurance protection for depositors in the event that their bank fails.
The FDIC provides deposit insurance for up to $250,000 per depositor, per insured bank. This means that if your bank fails, the FDIC will insure your deposits up to $250,000. However, this insurance only covers deposits such as checking accounts, savings accounts, and certificates of deposit. It does not cover mortgages.
If your bank fails, your mortgage will be sold to another bank or financial institution. This is because mortgages are considered assets and can be sold to other institutions. The new institution will become the holder of your mortgage, and you will make your payments to them.
It’s important to note that even if your mortgage is sold to another institution, the terms of your mortgage will remain the same. This means that your interest rate, monthly payment, and loan term will not change. The only thing that will change is the institution that you send your payments to.
If your bank does fail and your mortgage is sold to another institution, you may be concerned about the safety of your mortgage documents. Fortunately, your mortgage documents will be transferred to the new institution along with your mortgage. This means that you do not need to worry about losing your mortgage documents or having to reapply for your mortgage.
In conclusion, if your bank fails, your mortgage will be sold to another institution, and the terms of your mortgage will remain the same. Your mortgage documents will be transferred to the new institution, and you will continue to make your payments to them. While it can be concerning to think about what would happen to your mortgage if your bank were to fail, it’s important to remember that there are protections in place to ensure that your mortgage is safe and secure.
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