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Ask Dave

What Happens To The Mortgage?

Danny's smart; he knows that if his bank goes under, it doesn't mean the end of his mortgage. But what happens to it?

QUESTION: Danny is a new homeowner and doesn’t know much more than what he has to pay each month. Citi is his bank and they have his mortgage, but they are doing huge layoffs. If they go under, what would happen to his mortgage?

ANSWER: It won’t change anything at all. You have a contract and it cannot be changed. The contract has a value and the federal government, which would take your bank over, will sell that contract to another bank, and use the money they get for it to reimburse savings accounts of other people at that bank. They can’t go in and change the contract.

I don’t think Citi is going to fail, but even if it did, you’re not in jeopardy at all, but you will have to continue to pay your payments. Their customer service will suck for a while and there will be inefficiencies. If a payment of yours was lost, all you have to do is show that it cleared and it will be credited against your account. Then ask them where they want the next check to go.

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Want to Buy a House With Confidence?

Want to Buy a House With Confidence and Peace of Mind?

Want to Buy a House With Confidence and Peace of Mind?