(sorry for the bad grammar in the title) I was wondering, say if someone has their mortgage with Citi, and Citi goes totally under? What happens? Of course I know as many mortgages that can be sold will be sold, but isn't that the problem right now? Deadlock? No liquidity? Just wondering if either Citi or CFC dies what will happen to those who didn't default, but no one bought their loans.... How would that even work? Who would you pay at that point if Citi wasn't around, and there was no one who had bought your mortgage?
Citi wont go bankrupt. No big financial will go under, if anything they will be bailed-out, or at least given lots of pay-as-you-want loans by the Fed.
CITI can go bust just as Enron did...never to big to fail. More than likely would be sold for $1 (and the debt) to some Chinese Bank wanting to enter the states. Plenty of examples in history of banks failing.
A secured party can assign part or all of the security interest to another, called the assignee. That assignee becomes the secured party of record. It is also possible to amend a financing statement, but that requires signature by both parties. All other secured transaction documents, such as releases, assignments, continuations, need only be signed by the secured party.
The case with Northern Rock in the UK , if no buyer comes forward (even at £1) they would effectively be turned into a nationalised company and owned by the state. You would just continue to make your mortage payments as usual, they would slowly wind down as all old mortages are paid off. In reality they will get bought out.
That would be assumed by whomever takes over the liquidated assests of Citi. No different than any other business. A contract is a contract until you walk or run away and hide.