A very interesting article on the Mortgage law Network appeared that you should be aware of.
And banks are failing at an alarming rate. When a bank is taken over by the FDIC, the FDIC is protected by law from “side deals” made with borrowers which might tend to reduce the value of your loan to them. What does this mean? It means that some deals made with banks to help modify a mortgage to save your home could be in jeopardy.
Under federal law, the FDIC is formally only “on the hook” for a deal made with you — where the deal tends to reduce the ultimate value of an asset, as a reduction in interest or principal in your loan might — if several (potentially impossible) steps are taken. Section 1823(e) of the FDIC’s law provides that to bind the FDIC in the event it takes over your lender, the deal must be (a) in writing, (b) executed by both parties (often simultaneously with the bank taking on the loan), (c) approved by the board of directors of the bank with such approval reflected in the corporate minutes, and (d) continuously appearing in the records of the bank. Many of those requirements are out of the control of the typical consumer.
If you have a modified mortgage or are looking to get your loan modified and you have a concern that your lender might fail, please, please read Bank Loan Modifications and FDIC Traps For the Unwary.
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