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| Wish I knew exactly how the relationship between the Bank and the Trust functions.
Obviously the Bank must invest the money (lending it to others) so that it can pay interest to the saver. Therefore the Bank is deciding the risk. If it is a mortgage, then I expect the Bank hands over the debt obligation to the Trust. Now, if the Bank becomes insolvent, at least the Trust can foreclose the loan and attempt to liquidate the asset. That may not be a lossless process in a "sub-prime" situation.
Bottom line. Worst case you get 30k immediately plus, in due course, whatever the underlying is worth at closure. Likelihood of worst case is very small. | |
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thanks for the post. When you say 30k , is it per account?? (for example , if a person has a private, savings, 3a and fz accounts, how does it work?)