About the FDIC
* The Federal Deposit Insurance Corporation is an independent federal agency created in 1933 to promote public confidence and stability in the nation’s banking system.
* Throughout its history, the FDIC has provided insured depositors with prompt access to their funds whenever an FDIC-insured bank or savings association has failed.
II. What is a Bank Failure?
* A bank failure is the closing of a bank by a federal or state banking regulatory agency.
* Typically, a bank is closed when it becomes critically undercapitalized or is unable to meet its obligations to depositors and others.
* The FDIC is appointed receiver and assumes the tasks of:
o Disposing of the failed bank’s assets in a manner that maximizes their value, and
o Settling the failed bank’s debts, including claims for deposits in excess of the insured limit.
* A bank failure does not change your obligation as a borrower to make payments and comply with the terms of your loan.
III. Overview of the FDIC’s Asset Disposition Process
* One of the FDIC’s primary goals is to return loans and other assets to the private sector as quickly and efficiently as possible. To accomplish this, the FDIC employs several strategies to dispose of loans:
o Prior to a bank’s failure, the FDIC offers some or all of the failing bank’s assets for sale to healthy financial institutions upon the bank’s closing.
o Loans not sold in the initial sale are packaged and offered for sale to the broader financial market, typically within a few months of the bank’s failure.
o Until the FDIC sells your loan, it undertakes the associated servicing responsibilities.