Banks went bankrupt because of the subprime clash?

bthahir · Joined: 05 Sep 2007 Posts: 36 13.22 Dollars($)

can some body please tell me what are the banks went bankrupt because of the subprime clash?

gmakerley · Posted: Fri Jan 25, 2008 11:41 am Post subject:

you can go to 'www.ml-implode.com' for information of that sort...not everyone on the list is in bankruptcy. some simply closed because the markets changed and they decided to get out while the gettin' was good.

edited per forum rules

lisascherzer · Joined: 04 Jan 2008 Posts: 599 69.58 Dollars($)

Lenders kept competing with what they thought was more competitive products such as no money down loans or no income verification loans with very little money down. You could have a 580 score and get into a home with zero money down. In from 2002 to 2005 there were many people that got into homes with no money down, bad credit, over extended themselves and when people started to default on these mortgages, the industry finally woke up and realized that these are not good loans. Many lenders cut out no money down loans all together and they are hard to find right now but are still there if you are able to verify income and have excellent credit. Lenders just cut back on how much they are going to lend, especially on the risky loans like no income verification or investment properties. So I see it as more of a correction and going back to normal (before the no money down, no income verification, investment property loans) were done.

If you have good credit and can verify income then not much has changed. Since these types of loans were never really considered risky and don't have a high rate of default.

In mid 2007 credit lines dried up and the secondary market for these risky loans were almost non existent. Many lenders just closed when they had a hard time selling off their mortgage loans to the secondary market due to lack of demand. Other lenders that serviced their loans such as Countrywide are in this situation because they did stupid loans that are now in default. It is quite costly for lenders to have to foreclose.

jbarto65 · Joined: 04 Nov 2007 Posts: 627 0.00 Dollars($)

What happens if you have an account with one of these companies that goes bankrupt? What happens to your account? Is there warning that this will happen?

sara · Posted: Mon Jan 28, 2008 2:35 am Post subject: RE: what if bank goes bankrupt?

Hi Jbarto,

As far as I know, the FDIC (Federal Deposit Insurance Corporation) protects the deposits of customers in the bank for up to $125000 per bank not per account. The bank officials will be able to tell you as to how much you could retrieve from your account – most probably you won't get the entire amount saved.

Take Care

gmakerley · Posted: Mon Jan 28, 2008 7:43 am Post subject:

jbarto, i have first-hand experience with that question. my mortgage is with american home mortgage, which declared bankruptcy a few months ago. their servicing arm is still active, however; and i continue to make payments to them. will this last for the life of the loan? perhaps...perhaps not.

no matter what, the debt still exists (DRAT!!!) so no matter what happens in court, i will be paying some company or other for the next several years.

greg1 · Posted: Tue Jan 29, 2008 8:39 pm Post subject:

When a lender files for bankruptcy protection it is common that they liquidate their assets if unable to satisfy their monthly debt obligations.

So the mortgage holding portfolio is sold off to investors at pennies on the dollar. They must notify you in writing 15 days before the actual transfer.

lisascherzer · Joined: 04 Jan 2008 Posts: 599 69.58 Dollars($)

jbarto65,

The mortgage lender that goes out of business will sell off the servicing to another mortgage company since they are considered assets.

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