Author Topic: Financial Institution Failure  (Read 671 times)

Capt j-rod

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Financial Institution Failure
« on: July 23, 2017, 07:37:24 PM »
I have a reoccurring nightmare about the failure of the banking system. It was pretty damn close during the subprime mortgage game. All of the debt in our country is bought and sold. Just saw an article where some student loans are being forgiven due to loss of the paper trail. We are all so proud of our super low fixed rate 30 year mortgages. In my case I have 3.5%... I always fear that one day I will get a letter in the mail stating that my mortgage company is no longer, here is your new rate of 5%. I know its all FDIC blah blah, but my buddy was a salaried GM employee. One day he got a letter saying thanks for your service but your retirement is gone. Here is your new balance and you will receive half of what you thought you would. I know its a long shot and things would have to get really bad. What is scary is trying to talk to a human being from the loan company. There is no brick and mortar places to speak face to face. Just one of my phobias and one of the reasons I try to keep paying off all debt.

matchewed

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Re: Financial Institution Failure
« Reply #1 on: July 24, 2017, 08:36:24 AM »
Okay. So what are the reasons that things won't go south? You quickly wrote those off. Try researching that.

bwall

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Re: Financial Institution Failure
« Reply #2 on: July 24, 2017, 11:55:07 AM »
A mortgage company can't buy your note and raise your rate. Not because they don't want to, but because it's prohibited by law. Someone would have tried it by now if it were possible, but you as a consumer also have rights. Your mortgage is a contract that protects both parties--if you don't pay they get your house. In exchange, you are guaranteed a rate, hence the term '30 year fixed'. If it were an adjustable rate mortgage (ARM), then you might have a point.

GM: He should be happy that he got half. If he were holding stock instead of a pension it would have gone to zero. Pension robbers (I'm talking to you, Mitt Romney!) should go to jail as it is nothing but legal theft.

People need to be informed and educated about their personal finances instead of just hoping that everything works out. Hope is a great strategy on the sports field, personal finance, not so much.

Sibley

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Re: Financial Institution Failure
« Reply #3 on: July 27, 2017, 08:12:31 PM »
OP, I think you hit the nail on the head: "Just one of my phobias and one of the reasons I try to keep paying off all debt."

You're not being rational. Try to move towards rational and away from pure emotion. Is it easy? Of course not! But it is worth it. For one thing, I bet your daily life will be a lot happier.

ooeei

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Re: Financial Institution Failure
« Reply #4 on: August 01, 2017, 08:15:21 AM »
The difference with the pension is, you don't have much/any bargaining power with a pension. If there's no money in the pension fund, there's no money in the fund.  Even if a court finds in your favor, the money has to come from somewhere, so you can get screwed.

In the case of a house, you're the one who holds the cards.  You have the physical house, which is the thing that's worth money.  Even if the company goes bankrupt you don't care, because you've got collateral.  The only remotely comparable thing I could see would be if your house burned down exactly when your insurance company went bankrupt.