My parents are coming to an end of paying off their house mortgage but there is still a small portion left to pay (less than six figures). Now that the government has taken control, there is little chance for a default correct? What's the worse that can happen? Also, what will happen realistically... I'm not too worried cause the mortgage is small now and my parents don't throw their money around. They make 6 figures too so that helps. Still though, I'm just curious what is likely to happen and the worse case scenario.
if they have an account at IndyMac here is what happens in a nutshell First, the receivers have taken control of the bank already. So whatever your parents could have done....that opportunity is gone. Second if they have less than the insurance limit ($100,000 per social security #) then they have no problem. They can get their money back on Monday or Tuesday Third of they have more than one account, or they have money in excess of $100,000, they will have to provide evidence (deposit records of their own for instance) to that effect. This is usually handled on a case by case basis by the receiver (the government) Fourth, if they have money "at the limit" of insurance ($100,000 per social security #) and they have interest in addition to that, well that interest is probably gone. It is not insured, only money up the limit can be withdrawn... The receivers will normalize the banks operating procedures and they will control the bank until they can find a buyer. I would guess that will probably take a while to happen, from a month to maybe 4 months at the outset. The receiver's protocol is to limit Internet activity, and to ask account holders to go the "bricks and mortar" physical locations to transact business. Typically this goes on for a few days and then they restore Internet transactions. After a few days the bank should be up and running again. and yes, your parents or whoever you are referring to will have to continue to pay mortgage obligations just as before. If they mailed their mortgage payments in, they should just continue to do so and check with the bank manager (a new person to be sure) for any changes in account management. Thats about it... Good luck Steve
IF you want to spend about 20 minutes checking your FDIC insurance status, go ahead and click the link: http://www.fdic.gov/edie/ I think a bit of armagnac might do the same job for you, but if you want info from the horse's mouth, there you go. OF course, what your deposits are replaced with isn't really worth the same, but fortunately there is that lag effect...