PearlwhiteS2k

^ Very interesting article Erik

kpxlazy012

DANG I DIDNT KNOW this was going to be this many ppl replying to this.

philbert

i don't believe there is anything inherently wrong with how the banking systems works, ie the multiplier effect. however, the system of checks and balances needs to function properly to make it work, so i stand by my assertion that the people in risk at the banks originating the base mortgages are where the blame lies, and i guess to an extent the rating agencies, though i'm not as convinced of their willing consent, given the hoops my former group went through to get a program consisting of actual government guaranteed loans rated a few years ago...

still, there will be a lot of money made by alternative investment firms in this environment in the next few years; unfortunately my previous employer pulled the plug too early.

slackfaster

I've got a WAMU mortgage on some property (no house on it yet) --

I'm trying not to blink -- but should I be nervous about the bank that holds my mortgage going under?

I have a lot loan (30yr fixed at (crazy) 7.5% -- it's a lot loan -- nobody wants to give you a loan on just land).

any thoughts appreciated...

vtec9

A WaMu failure will severely stretch the FDIC, which has only around $45 billion in its fund after the IndyMac payouts.. this is below the lawful limit set in 06.

IndyMac was estimated to cost around $15B, but in reality, I believe it was around $9B. But, IndyMac only had ~$32B in assets when it went under. WaMu has ~$330B.

When this is all said and done, the FDIC will surely have exercised a few lines of credit from the Treasury.. $30B here.. $30B there. Whats the diff.

Don't be nervous about your mortgage. You have a contract. When the bank goes under, or is bought up, your mortgage will be transferred to a new owner, and nothing will change except who your payments go to.

Or maybe if you're lucky, it will end up in purgatory and you'll never hear from a bank again.

Chris S

That's not going to happen. Some entity will continue to own your mortgage, just keep paying according to whatever instructions they send you.

WaMu's financial problems shouldn't affect the terms of your mortgage ex. perhaps the "remit to" address.

vtec9

That was a joke

Elistan

Just be careful that the new mortgage owner keeps up with your escrow setup, if you have one. A friend moved into a new housing development once where a lot of the financing was done through the building. The mortgages were sold, and the new holder failed to make insurance and property tax payments on, basically, the whole neighborhood.

It got straigtened out eventually, but was supposedly a PITA in the meantime. The city can take your house if you don't pay the taxes, y'know...

Chris S

One more reason to avoid escrow if you can. Escrow and PMI are evil IMO.

AssassinJN

This reminds me of when everyone was getting ready to jump ship from etrade when they were going through trouble. Needless to say I stayed in and am still here suffering no losses. If you're under the federal limits, then stand firm. Jumping ship only helps to doom the company that tiny bit more.