Whenever we talk about crashes we always talk about

[jwirr]

transferring our banking to the Credit Unions. How are they safer? I thought it was because they invest in local investments but then I was talking to my daughter.

She used a loan through her credit union to buy her house. But they sold her loan to Chase and then Chase sold it to another bank. She was never in default or anything but they sold it anyhow.

Why are we suggesting using Credit Unions instead of banks in the first place?

[Warpy]

1. They're not safer.

All banks are part of a huge web. The big, ugly spiders in the center of it get into trouble, the little ones out at the edges will find loans called and other shenanigans pulled to try to bail out the big guys that they'll be in trouble, too, and Congress won't bail out the little guys, only the big, ugly spiders.

ETA: What I should point out is that they are commonly easier to deal with if there is a problem with your account or if you need loans. Their terms are often better for small depositors.

[jwirr]

2. Thank you. So the big guys are using her loan to hide behind.

My other daughter said after they get their house refinanced she is going to hide her money under the mattress. Of course living through the Great Depression years I realize that is not necessarily safer either.

[Warpy]

3. Around here, people still use the Bank of Jose Cuervo

and bury it in old tequila bottles in the back yard.

[jwirr]

4. Good idea but around here it probably would not be tequila

bottles.

[mahina]

5. It's possible to find a mortgage that won't be sold but not easy.

I love my credit union because it doesn't exist to overcharge me. Many years ago I had a citi card and had one late payment. My interest rate went to 29% overnight.

My credit union cc% is 8%. Haven't had to deal with anything like the usury that I did w citi.

They exist to help us, and we can participate in governance.

They are too small to do a Lehman Bros and as far as I know, don't engage in the kind of high risk investments that caused the big banks to tank in 08.

YMMV

[Cleita]

6. My credit union bank gives me a vote in how it's run, but I have to

have a savings and checking account with them to be a member. I don't believe that just having a mortgage with them gives you a vote in how the bank is run. If the members tell the credit union they don't want practices such as selling mortgages to Chase then they can't do it. Best to check their charter to find out how they operate.

[SusanCalvin]

8. I doubt you can get a mortgage without having a token savings account, at least.

So that would make you a member.

[Cleita]

11. I suppose it depends on the credit union.

I never tried to get a mortgage from mine, but most lending institutions don't turn down what is a good business loan.

[SusanCalvin]

12. You can't do anything at any credit union I've belonged to

Without a token savings account. $25 is the amount that pops into my mind.

[Cleita]

13. Lovely red herring.

Buhbye.

[SusanCalvin]

14. Huh?

I was just offering a piece of information. No idea why that gave you offense (apparently).

The token savings account, my point was, would make one a member, which I believe was the original point of this subthread.

Buhbye yourself. Congratulations on having made my list of people whose handles I'll probably remember, at least for a while.

[Fuddnik]

15. My CU is the same.

A token savings account, but the amount is only $1.00. Each has a connected checking account w/ free online banking and bill pay. And, I think you have to have direct deposit for each one.

We have 3 accounts there. Each one requires the token deposit, One for me, one for my wife, and a joint account. And we have a safe deposit box.

[Cleita]

17. That was my point. Each CU has different rules and I never said differently.

I don't know why poster was trying to pick a fight with me by throwing in red herrings.

[dixiegrrrrl]

7. Back in 2008, when the movement to leave big banks was afoot

credit unions were touted as being safer because generally they were....then.

Most probably are. Some are not.
As for "selling" the mortgage, what they sell is the right to "securitize" it,

Securitization is the process of taking an illiquid asset, or group of assets, and through financial engineering, transforming them into a security. A typical example of securitization is a mortgage-backed security (MBS), which is a type of asset-backed security that is secured by a collection of mortgages.
www.investopedia.com/ask/answers/07/securitization.asp
.
The part of "selling" the mortgage can also refer to selling the "servicing rights" to a company which collects the payments every month.

It is highly likely that your daughter is referring to the servicing part, since homeowners are generally not made aware of when their mortgages are sold as bonds.
(Technically, the mortgage itself is not sold, just the over all payment performance. The mortgage itself is loaned to Freddie Mac as collateral, and given back when you pay off your mortgage.)

[SheilaT]

9. Selling a mortgage has absolutely nothing to

do with her payment history. It has to do with the original holder wanting to get back their money so they can lend it out to someone else.

I likewise have never been late, and my loan has been sold, although so far (6 1/2 years in) only once. As it happens, Chase now holds my mortgage, has had it for about three years. They kept on trying to persuade me to refinance, and I finally got them to take me of that mailing list. If I refinance, it will be because I want to do so and to shorten the loan period, not to start with another 30 year loan and give them more interest.

[Fuddnik]

16. Yeah, on my previous house, my mortgage was sold 5 times in 10 years.

With Chase being the last holder.

When I moved to Florida, I went through Wachovia, and they had a document that the loan would not be sold. However, Wells Fargo bought the bank and the mortgage.

[Punx]

10. Credit Unions

Have a separate insurance system than For Profit banks. The NCUA vs the FDIC and I'm pretty sure it is better funded. However note that the NCUA is a Federal program as well. If the "Shit hits the fan", who knows what Congress will choose to do. Remember "The Senate is owned by the banks." I forget which of our Democratic Senators I'm quoting. CU's tend not to gamble as much either as they don't have publicly traded stock and Wall Street to please.

As to a safe place to leave your money, well there really isn't any. Even burying some gold and silver in the liquor bottle of your choice will have risks. Bury it far enough down that a metal detector won't find it for starters and don't let anyone you don't trust with your life know about it. And burying it and digging it up every day to buy bread is kinda a pain.

Maybe short-term Federal treasuries as I believe that for American Citizens this would be the last thing the Feds would refuse to default on. And they always can pay, it's called "Printing Money"; it's just about who they want to make whole. But they won't be as liquid as $ bills, and deal with the Feds directly through "Treasury Direct" as a third party could go under and take your money with them if they were using your funds as collateral. I forget the term for this but it's happened.

[glinda]

18. SO do you know if having cash at home is then useless if the shit hits the fan?

I have some money in a big bank but am considering pulling it to our CU where I also have some funds now. I may pay off my house but not sure due to needing a structural engineer to come look at an issue. I don't really know what the hell I am doing but sense trouble ahead. Can feel it. So am scared.

[Punx]

19. I think it will be.

As long as people have confidence in our currency I would think so. What's happening right now is deflationary, so $ bills will be an acceptable form of storage of value for the time being. That may change some day, but when it does, it will effect a bank account balance as badly as a printed bill. Mostly I recommend staying out of debt to the greatest extent possible.The economy as it is set up now makes that really damn difficult for the average person. I would bet that you would get (however small) a better interest rate on your money from a CU than a for profit bank. Paying off a mortgage right now would be a better return than keeping money in the bank, however if you need cash for living or emergencies you will have to borrow back against the home, whose value might change a great deal in a severe recession or worse, and there might be a real lack of willing lenders in a "Shit hits the fan scenario".

If you want to keep actual cash on hand, there's two problems with "Stuffing the Mattress" so to speak. One is that it is very susceptible to loss. A fire, or theft and it's gone in a blink of an eye. Still for those that can afford to keep some cash around, it could prove very wise if banks are closed or go under. The question is how much to keep, and that will vary by individual, but enough to buy food and meet essentials seems wise to me. For how long? I don't know, again that will vary.

Same with gold or silver. And remember, if word gets out that a person is holding a significant amount of funds, those of ill repute may come looking for it, true or not. This is why there is no perfect or really good solution other than to have friends in your community and be as self sufficient as possible.

Also, a caveat, I not a financial planner which is probably a good thing, just someone with an economics/finance and accounting background who helps run a community based non-profit at this point in life, so these are only opinions. There are people here on SMW that I feel are much sharper than me.

[glinda]

20. Who? Which Forum? The Investing one? I have a huge decision to make

and want to make it in 30 days or less. I am not well versed in economics but somehow managed to pool all of my parents funds together, sell their house and watched them die (at least taken care) in the last 3 years. From that I actually paid off my student loan so the monkey is off my back.
I have received an inheritance form a dead uncle and it could change my situation but also scared because I live in the middle of nowhere, houses are moving slowly and it may have a structural problem. AM going to have someone look at it.
On the other hand....if I paid it off, even though we will loose another 20-30 thousand most likely (already lost 45 thousand on it) we would have much much smaller house money going out.
I am scared that i could wake up in the morning and the money would be gone. Seriously. Yet even in this planning it will go faster than i would like. I am aiming for keeping half or just under for emergencies. Will have to see.....
I am not going to invest either. Too scary. Am just trying to keep myself from being homeless somewhere down the line.

[Punx]

21. Paying off your student loan is a good start

It can't be discharged in bankruptcy and I'm sure the interest you were paying was far greater than a savings account would pay.

As to your house, if it has a structural problem you are going to have to take the loss (cost of repair) one way or another. If you don't fix it, then when you sell, the buyer, if you can find one, will take the cost of repair off the selling price. One way or another you are stuck with the cost. So the question to me is what will be the results of not fixing it. If you don't fix a leaky roof, the water damage and rot/mold will cost you much more than the roof would have for instance. But that money will now be tied up in the house. And if it's going to become a money pit then it might be best to sell for what you can get and move on but get an expert opinion on that.

If you have excess funds I would split them between a couple of CU's and maybe a for profit bank. If anyone is lucky enough, I would keep no more than 50k in any one financial institution. These are my rules and there might be better advice. There are bank rating agencies online that can help in choosing.

At the moment I think "Bail In's" at the moment would be very difficult to manage throughout the US economy. It would create a lot of havoc with so many automatic payments and intertwined relationships.

Also, if you want to keep some money safe longer term then I again recommend short term US treasuries. They won't return much of anything though.

Also, don't be in a rush, take your time. People typically make bad decisions when they are scared or angry. And I would get other opinions.

[glinda]

22. Thanks. I am going to start with a contractor or structural engineer to

see what i am dealing with.
I have some money in a big bank and the other part I was going to do CU that we are at also. If I end up paying off the house I will loose and if i fix it i will loose...you are right. But I think knowing what the issues are is a good first step. I just don't want to keep drawing from my money because my health insurance went up $200 and I still pay by myself. It comes out of my husband's retirement savings that took the big hit and now are dwindling....
Money goes fast....even if one catches a small break.
Glad my loan is gone!What a theft though!