What Happens to Our Mortgages When the Banks Collapse?

[mollypup]

I'm concerned about this because the hubby will surely lose his job when the economy finally collapses and we still have a mortgage on our home to pay. If the banks bite the dust, then are mortgage holders free and clear to keep their homes without having to pay for them anymore?

[helomech]

No, not free and clear. Not sure how they would take payments though.

[The Stig]

I don't think you can make any sort of blanket statements.

I don't think "the banks collapsing" means every bank, in every state, will all magically cease to exist.

Is it possible that the economy goes tits-up and a bunch close? Sure. National Bank Holiday to sort out the mess? Possible.

Every bank shuttering it's doors and sending it's workers to the soup-line? Doubtful.

Even if there's a major event that sends the banking industry into chaos and a bunch of banks go bellyup, I don't think you can make a blanket statement that all banks will respond with XYZ measures.

Could it happen where a mortgage holder ends up essentially squatting on their property? Sure. Would I hold my breath and plan on spending my mortgage payment? Nope.

ETA: And, as always, SHTF is not one, specific, monolithic event. You simply can't make sweeping generalizations that ABC will happen when XYZ takes place.

[Sniper-T]

^
Good Answer.

The other thing to consider, is how long the event is going to last. From the safety of you home, listening to CB's you may think it is a permanent or semi permanent event. but what happens if in 6 months, they get the country back up and running. the first thing they will want to do is start collecting their money again, including back payments and interest.

Banks are big business, driven by big money. Their main goal is going to get back on top, no matter the cost or the hardships to you, me, or the other guy

IMO

[mollypup]

The euro-crises in Europe is really getting beyond bad. It's estimated that the euro could collapse within 10 days. By Christmas for sure. U.S. banks are so intrinsically in bed with the European banks, that when they (the European banks) fail, it is only a matter of time before the banks here fail. We are talking about a crisis many times worse than the banking crisis of 1008. That crisis took out several large, TBTF banks (Lehman Bros. for example) and will certainly wipe out a much bigger slew of them again. If that happens, it's just a bad chain reaction of failing events from lack of product transport to mass job losses. It will be an apocalyptic event of pretty much biblical proportions. That's why I asked the question if such a thing should (and most likely will) happen, will we be off the hook as far as mortgages are concerned? I don't think the banks will be allowed to return from the ashes to screw us again. It will be a total paradigm change.

[TEOTWAWKI13]

When a bank fails, the FDIC steps in to transfer that banks assets to another bank (i.e., your mortgage). The FDIC was created by Congress.

[mollypup]

When a bank fails, the FDIC steps in to transfer that banks assets to another bank (i.e., your mortgage). The FDIC was created by Congress.

That's what's supposed to happen when a bank fails. However, on this grand scale of bank failure, the government as we have known it will also go down taking the FDIC with it. And since BofA did it's evil little trick of putting all it's debt onto the customer's side of the column, that makes the FDIC responsible for insuring it's stolen monies. Do you think that will leave any insurance money left for us average Americans? Better get your bucks out before they fail. There will definitely be runs on all the banks here after Europe fails.

[The Stig]

The only way I see banks failing to the point of homeowners getting to burn their mortgage payment booklets with glee is that the entire country descends into total anarchy and remains so for a long time.

Otherwise, the banks and .gov will figure out a way to get that money from you. Period.

That's the way I see it.

ETA: Molly is wise to note having some cash on hand is always a good idea, especially if the general populace goes apeshit and runs on the banks.

[ravensgrove]

I see "all banks fail and we no longer owe any mortgage, credit card, car payments debt" apocolyptic WISHFUL THINKING all the time. I hope I win the lottery too, since I never buy a ticket...too Scotch for that...I see my chances of either scenario as being fairly low.

In the end....you can bet, that someone, somewhere is going to become your new Lord, and you a serf to something.

The best thing you can do, in my opinion, is pay your bills, and don't get os many you are sitting around hoping the sky will fall so you can be a rich chicken little. If the banks failed that catastrophically...for that long a duration...the money you saved on your mortgage wouldn't be worth more than as toilet paper anyhow.

The ONLY way I see anything even remotely such as this happening, is we have some sort of technology databank erasing catastrophic event...solar flare, emp, asteroid type event...in which case...guess what...the least of your worries is going to be your mortgage.

[Evolver]

Banks are slowing selling themselves to the government by taking handout just like GM and there isn't a damn thing that we can do about it. :mad: If you foreclose on your house... guess who will own it?

[Evolver]

Can you say Socialism. Grrrrrr.

[LUNCHBOX]

They can take my mortgage out of my cold dead hands.....lol--j/k. My concern isn't all the banks closing across the board, its my finance department since my paycheck is direct deposited and if something (my bank) bellied up quickly it could cause major issues because I'm sure they don't have a plan in place.

[Sniper-T]

^
That's an interesting point. Never mind the mortgage, your savings and investments... what about your last cheque???

How many people live, or almost live, paycheque to paycheque? If SHTF 12 days into your pay cycle, you're sitting around almost broke, waiting for that next cheque.... and then your bank goes belly up. I know the company I work for uses a payroll service, and the slightest glitch can cause 1 or 2 days delay in getting our money... a major crunch like that could mean NO money coming in for a while...

I guess that's why it is good to have money at home instead of earning that fraction of a cent in a savings account!

[mollypup]

No apocalyptic wishful thinking here, just reality. I don't think many of us still truly understand the enormous depth, nadir if you will, of what a global banking collapse will mean for us. It will also mean the end of the power grid and everything we've become dependent on - especially all of our electronic goodies: cell phones, smartphones, computers, t.v.'s, just about everything you can think of. This will NOT be fun, and it's nothing to look forward too. But I am a prepper who wants to envision the worst possible case scenario and try to get ready for it as best I can. I believe there will be a global banking disaster, it's so in the making already and it's only a matter of time....days or weeks until it reaches our shores and our banks collapse most likely in a very breathtakingly short amount of time. I suggest making sure you have several hundred, if not thousands of dollars safely tucked away somewhere that you can access even without the use of a car. And please take all precious metals and documents out of your bank's safe deposit boxes. If the banks close, and they will, you will NOT ever be able to access your safe deposit box. They will keep it.

I've been doing a LOT of reading from MANY different news sources, mainly foreign since MSM will not touch such subjects, and I hear the countdown loud and clear.

[LUNCHBOX]

^
That's an interesting point. Never mind the mortgage, your savings and investments... what about your last cheque???

How many people live, or almost live, paycheque to paycheque? If SHTF 12 days into your pay cycle, you're sitting around almost broke, waiting for that next cheque.... and then your bank goes belly up. I know the company I work for uses a payroll service, and the slightest glitch can cause 1 or 2 days delay in getting our money... a major crunch like that could mean NO money coming in for a while...

I guess that's why it is good to have money at home instead of earning that fraction of a cent in a savings account!


That is the point to take from this type of thread/post. I posted in a previous thread that I (as well as others) keep cash on hand for just this type of incident. Of course once this type of situation arises that cash won't last long.

[sidewinder]

First of all you will still owe the money to someone. A bigger bank or the Fannie or the feds...

Your biggest worry won't be who to pay...it will be how to pay if nobody has a job.

Depending on how much you owe...plan on losing your house to foreclosure...sooner or later someone will be along to retake it.

Even if you own your home it's not a guarantee of keeping it. Taxes will still be owed because everyone wants their money.

Foreclosures happened in the Great Deprssion...they will happen in the Greatest Depression..

[Sniper-T]

^
now that is depressing!

[bacpacker]

Sad but true!

[Evolver]

On a lighter note if it gets to this point there isn't enough LEO's or jail cell's to enforce the eviction papers. :) Hey my glass is still half full :)

[ladyhk13]

So if this type of collapse does happen (hypothetically speaking), will it affect people that are paid by the federal gov't (military, congress, veterans admin, veteran disability, social security ect..)? What about people who bank with small local banks and not those large banks? If the big banks go under is that going to affect our community banks and credit unions?

[izzyscout21]

On a lighter note if it gets to this point there isn't enough LEO's or jail cell's to enforce the eviction papers. :) Hey my glass is still half full :)


LUNCHBOX, i want a room with a view..... and select pickings from the chef.

[sidewinder]

It depends on how it happens.


Some history....before I ever made my first mortgage payment my mortgage was sold. Within a year it was sold again.

So who actually holds your mortgage?

If it's not paid off and you and the rest of the country have no income like happened in the great depression...you'll lose your house and everything else you owe money on.

This is why I say if you have a 401k that could soon be worthless.....do a reality check NOW....and you still have a mortgage....would it be better to save your house or your 401K?

I would use my 401k to save my house....because a worthless 401k and no house is a bigger problem.

[mollypup]

So if this type of collapse does happen (hypothetically speaking), will it affect people that are paid by the federal gov't (military, congress, veterans admin, veteran disability, social security ect..)? What about people who bank with small local banks and not those large banks? If the big banks go under is that going to affect our community banks and credit unions?

Don't really know but it's likely that depending upon the severity of the collapse, and it will be ungodly severe, the people of this country (and others I'm sure) will simply lose complete confidence in our government. Law officials and military personnel, etc... will also lose complete confidence and will no longer carry out the wishes of the elite bureaucracy leaving the TPTB impotent, and even in fear for their very lives. If the people no longer support the government there is no government, so I would imagine all those governmental agencies such as the veteran's admin, social security, etc...will no longer exist. We will be totally responsible for ourselves once again.

[sidewinder]

To cash any type of paycheck...one needs to have a bank to do it...

If all the banks close and the bigger worry is if a dollar bill still has any value....

I have a paper bill with Sadams picture on it from the former Iraq. it's not worth the paper it's printed on..

remember the one certainty throughout history...

Death & taxes....they always want their money...