FDIC guarantees your deposits, not your payments

When the Federal Deposit Insurance Corp. seizes a bank, it reimburses most of the savers. Borrowers, however, still need to repay their mortgages.

Q. The bank that gave me my mortgage two years ago recently failed and was taken over by the federal government last month. The bank was insured by the FDIC. Will the federal government automatically pay off my loan, or do I have to keep making payments?

A. Sorry, but you will have to keep making your payments. The Federal Deposit Insurance Corp., or FDIC, is the government-run agency that insures a customer's deposits at a bank - not loans.

For example, if you had a $100,000 savings account or certificate of deposit at the failed bank, the FDIC's insurance coverage would guarantee that you would get all of your money back. But if you instead had a $100,000 mortgage, you will need to keep making the monthly payments in a timely manner.

Sooner or later, the FDIC will find a new bank to purchase your old one. Federal law prohibits the new bank from making any major changes to the terms of your original contract, including the interest rate that you are charged. The bank, however, can make minor alterations - mostly simple things, like requiring you to write the name of the new lender on your monthly checks and sending your payments to a new address.

Q. My husband and I purchased a tract home that was built in 1969, and now we want to sell it so we can move to a retirement community. The house came with big asbestos tiles on the floors, but we have covered them with linoleum in our kitchen and carpeting in others parts of our house for the past several years. Our real estate agent says that we should tell the buyers about the tiles underneath, but we think it's unnecessary because we have read a lot about asbestos and have learned that it's not a big problem unless it has been shaken loose by a remodeling project. What do you think we should do?

A. It would be a good idea to inform the potential buyers about the asbestos in the tiles, even if such disclosure isn't mandated by state law.

The type of asbestos tiling in your home was widely used until the 1970s, when the federal government banned it after determining that it could cause lung cancer or other health problems after it was "disturbed" by new construction or a remodeling project. The dangerous asbestos products would be inhaled by workers or homeowners into their lungs.

The tiles buried beneath your floors probably aren't a danger now, but could become hazardous if your buyers decide to remodel and unexpectedly put those asbestos fibers in the air.

If you disclose the presence of asbestos today, your future buyers can take appropriate cautions if they buy your home now and decide to remodel later. Your own exposure to a future lawsuit also will be limited because you disclosed the problem before the deal closed.

Q. We are planning to start a major remodel of our house, and followed your advice by asking friends for referrals and getting three bids for the job. We decided to go with the lowest bidder, but how can we find out if the contractor has a legitimate contractor's license? Also, how can we find out if he's insured if someone gets hurt on the job?

A. First, ask the contractor to provide a copy of his license before you sign an agreement. But simply asking to see a copy is not enough, because some contractors have been known to "make up" their own licenses or to alter expired licenses so they appear to be up-to-date.

To help ensure that the contractor is legitimate, you should then contact the agency that regulates contractors in the area. In most states, it's the contractor's state license board, the department of real estate or the department of consumer affairs.

Many of those government agencies not only will confirm licenses but also will provide other valuable information about a contractor's work experience, insurance protection and history of complaints.

If you have access to the Internet, you should also visit www.contractors-license.org. It's a great Web site that not only lets you ensure that a particular contractor is licensed but also includes the licensing requirements in each of the 50 states.

• For a copy of the booklet "Straight Talk About Living Trusts," send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 2960, Culver City CA 90231-2960

© 2008, Cowles Syndicate Inc.