A bank failure means the bank has more expenditures than assets. Through critical analysis of a bank’s financial record, the FDIC can determine when a bank is undercapitalized. Because they are undercapitalized, a bank can no longer meet its financial obligations to its depositors and creditors. The FDIC is appointed the Receiver and is charged with disposing of the banks assets in a way that will maximize their value. With this money, the FDIC can settle the banks debts. These debts include any depositor amounts not covered by FDIC insurance.
When a bank fails the FDIC insured amounts are transferred to another bank designated by the FDIC.
The bank nor the FDIC will contact account holders to ask for personal information about accounts or passwords. If anyone is contacted avoid providing any information, the caller is likely a scam.
How to Pay Home Loan Mortgages to Failed Banks
Mortgages and loans will be serviced at the failed bank. The payment amount and due date remain the same. Automatic drafts for the payment from a checking account at a failed bank will continue without change. Continue making the check payable to the failed bank. The mailing address also remains the same.
Loans of any type can be sold by the FDIC to another company. If there have been problems paying the loan, contact the FDIC to try to work out terms of the loan or undergo a loan modification program.
Loan Applications in Process
Any loan applications that have not been approved or denied before the bank failure may be affected. The loan officer contact information remains the same. Applicants should contact the loan officer directly.
Are Checks Still Good?
Checks that account holders have written against their account will be honored up to the available balance on the account. The current check is still a valid instrument and can continue to be used. These checks will be automatically rerouted to the new bank the accounts have been transferred to.
Retrieving Safety Deposit Box Contents
The contents of safety deposit boxes remain on site. The bank will continue to operate as usual. People who have items stored in safety deposits at failed banks can retrieve their items at any time or choose to leave them in storage. These will remain open until the decision is made to close the physical building down. Sometimes the new bank will open it under their name.