What happens if bank goes bust?

[foxylady5160]

Guys,

A burning question that was debated over a few drinks over the weekend, hows than ever. If a financial insitution goes bust okay the govt guaranteeing some of them. But what happens with customers finances with the bank with mortgages, loans that are still outstanding as in paying there regular payment etc does that mean they paid off or does it pass to bad debt company. This has cause some heated discussions over the weekend and no one is none the wiser. Just what is the story here?? I didn't see this on the discussion thread.

foxy

 

[z109]

Re: What happens if bank goes bust???

The loan is still due. The debt will be sold to whoever wants to buy it at whatever price they're willing to pay. For example, in the current climate a mortgage of 300k on a house that has a current AMV of 270k might sell for 250k. It's likely that another bank or mortgage company will buy these up. As far as I'm away, the original terms and conditions stay in operation. As the loan has been paid regularly it shouldn't be sold to a bad debt company, unless that bad debt company decides to get into the mortgage servicing business!

 

[Maximus152]

Foxy, must have been strong stuff you were drinking . All I can say is who ever thought that if a bank goes bust then your mortgage is cancelled and so therefore you have a free house is either in need of a mental health check or very nieve. If anything this outsatnding balance will be almost like a dog with a bone..... who ever takes over will be looking for their pound of flesh. Now with rose tinted glasses on it would be a wonderful idea, and I wonder could we include some credit cards bills.


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