Is your money safe?

[dang65]

May be it means one wouldn't have to repay the mortgage and one could have the house for free

The people with mortgages should just have to switch their payments to the people with savings/business accounts. But somehow I don't suppose it would work like that. Instead, the people with savings would lose the lot, and the people with mortgages would be repossessed. The actual cash would never be seen again.

[TykeMerc]

May be it means one wouldn't have to repay the mortgage and one could have the house for free

Mortgages are tradable assets (yes I know some aren't really assets especially the sub primes) so they would be sold on by the liquidators to meet the companies liabilities. They could conceivably be called in but that wouldn't be worth it since only a tiny minority of mortgagees could repay in one hit.

[Jubber]

More importantly (though irrelevant to most people here, I know), what happens to your mortgage if the bank you have it with goes tits up?

The debt would be sold on - just like any other debt that you have. A mortgage is a sodding great loan/debt just like any other loan/debt, and the best bit is, when your house can only fetch two thirds of what you owe, you'll still owe them all of it. Fun huh

[Bagpuss]

Those who had Northern Rock loans didn't get a free house, but that was a special case, they owe the government and were transfered to uncompetitive deals.

If people try to default, the mortgage indemnity premium that the mortgagee took out on behalf of the bank would refund the administrator/liquidator/bank purchaser and the insurance company would then seek the outstanding amount from the mortgagee.

[expat]

national savings

Oh, the guys who did the Post War Credits?