Time now for stretching your dollar. We all want
to do it. We give you tangible tips to
help you make the most of your money. Well
, bank failures in the US, they're generally uncommon
. At least the ones that we've seen of late
2023 has been an exception as this year's banking crisis
started in early March with the failures of both the
Silicon Valley Bank on the West coast and Signature Bank
on the east coast. Well, a subsequent study
on the US banking system found that nearly 190 more
banks are at risk of failure. So many Americans
might be wondering what happens if you have a mortgage
with a bank that fails. So joining me now
to break it down as Preston Cherry founder and president
of concurrent Financial planning. Preston, thank you for
coming on the show and this is such an important
topic. So how does it work if you do
have a mortgage with the bank that goes under?
Well, as much as we don't like bills who
does, uh that mortgage still stands? I mean
that mortgage is an asset on the bank's balance sheet
. And so when they go under, uh,
that, that asset is just going to be transferred
to another bank that steps in and purchases those assets
. We've seen larger banks now step in and purchase
the assets of smaller banks and the mortgages are an
asset and are included in that purchase. Are there
any exceptions? Uh, in this case, Preston
that our viewers need to know about. Uh,
no, uh, not necessarily, I mean,
assets are assets and I, I encourage folks that
when those, uh those banks fail, hopefully they
do not. But larger banks will purchase those assets
continue to make your payments. You will be notified
more than likely via email. And then you can
also reach out to your former bank's website and get
, get that information as well. And how does
that communication usually happen? Or at least what should
consumers be prepared for? Preston if a new bank
comes in scoops of those assets of the bank that
went under and now technically your mortgage is with the
new entity. Yes. Yes. They will give
you instructions on how to log on to your new
account. Give you background on your new servicer,
which is your new bank and uh allow you tools
to keep on paying that mortgage as much as we'd
all like to. Uh, they will give you
instructions on how to continue that and keep your credit
and your lending history in, in good favor.
Is there any way that a bank can call a
loan Preston if the bank does collapse and then demand
full payment of the remainder of that loan immediately.
Mm Well, uh it could be a potential acceleration
but uh that said uh that when you owe the
debt, you still have to pay that debt in
in full. So those new negotiations are going to
be at the institutional level. But far as your
obligation to the bank, you still owe that uh
that that outstanding loan. Ok. So let's talk
about some tools. Um Obviously this interview hopefully will
help consumers but any other sort of mortgage tools comparison
websites. Uh Preston that our viewers should know about
. Yes, I I would say uh going on
to particularly the the federal websites for uh you,
you mentioned the studies that are going on about institutions
that may be at risk. So reviewing those reports
are probably in in good order, seeing those reports
and seeing where your bank stands and, and seeing
what uh where you, where you may lie in
that, in that report. What else do our
viewers need to know about this process? Of course
, it is kind of a tenuous time, right
? With more banks looking vulnerable really by the day
? Well, I I I continue to stress that
, you know, assets are assets and it it
is a, it is a continued obligation of,
of yours. I mean, uh it's a debt
to you but an asset to the bank. So
uh even though the bank may go under uh the
assets on the books are still attractive to people,
to the banks that come in and purchase those.
So continue to make your payments. Uh So you
can keep your history in good order. Yeah.
Will it impact your history at all? Your credit
history? Any sort of unfortunate negative impact it could
have on the consumer or the debtor, even if
it's not their fault, right? If a bank
actually collapses, uh no, not more than likely
, not more than likely not. If you're making
your payments on time and making good faith effort in
order to uh make those payments, then if there
is a uh missed payment, that is not a
fault of yours more than likely that's not going to
affect you. So just continue to uh look out
for your emails and then reach out to your former
institutions website to continue making those payments. All right
. So you're still on the hook to you.
Still on the hook. Preston, New Cherry founder
and president of Concurrent Financial Planning. Preston. Thank 00:04:55.139 --> you.