We are seeing today many of the same problems we saw in the early 1980’s, when so many savings and loans and banks became insolvent and were taken over by the Resolution Trust Corporation and/or the Federal Deposit Insurance Corporation. In the 1980’s almost 1,000 banks and S&L’s were put into conservatorship or receivership under the RTC and FDIC. The insolvent S&Ls were usually either liquidated or were purchased by other S&Ls or banks, with the assistance of the RTC or FDIC. Problems arose, however, when mortgages held by the defunct S&Ls were refinanced, because you had to do some serious detective work to find out what happened to the assets of the original lender. Were all the assets purchased by another lender, or were the assets held by the RTC or FDIC because the lender was liquidated?
We are encountering the same issues today, as we are into another cycle of bank liquidations and receiverships. However, thanks to the internet, it is now easier to trace the history of bank acquisitions, mergers and liquidations by going to the Federal Reserve System’s National Information Center website. From this website, you can perform an “Organization Hierarachy” search for an institution, and find out who has acquired the lender you are looking for. An excellent article on this search has been written by Vincent G. Danzi, and published in the October 2011 issue of the New York State Bar Association Journal. I strongly recommend reading this article, and keeping a copy for your future reference. You never know when you might have to find out what happened to your bank!