Are Bank Failures Jackpots for Customers?

If you’re like the rest of the country, you’ve probably checked the newspaper, t.v., or favorite blog each day to see if your bank could be the next one to crumble.  No doubt you’re concerned that your hard earned money in checking and savings might be at risk in case a permanent closed sign is hung in the teller window.  However all isn’t doom and gloom, for some customers the news of a bank failure might bring a windfall jackpot.

Recently it was announced that one the nations largest banks has settled a lawsuit with a handful of state attorney generals which will lead to homeowner relief in the form of mortgage loan modification.  Many of these changes give borrowers the opportunity to hit a financial home run in mortgage relief and retain ownership of their homes.   Customers that entered into subprime loans and arm loans with negative amortization will be given the opportunity to get new loans with interest rates as low as 2.5%, reduced interest payments and possible reductions in principle balance.  Getting a 2.5% interest rate would mean thousands of dollars in savings not to mention a dramatic reduction in monthly payment!  I’d love to get my hands on a 2.5% or even a 4.5% interest rate!  Cutting a couple hundred bucks off my mortgage bill would go along way in helping put some some $4 dollar gas in my tank.

While it’s a relief to see that tax payer money wasn’t directly used to make these mortgages work, it makes me wonder if more people aren’t actually looking forward to some news that their bank might be on the ropes.  Would you welcome news that your bank might be on the way under if it mean’t you could save thousands of dollars on your home loan?