"When a bank goes into liquidation the secured creditor, (largest share holder or holders in the bank) have the option to take control of the assets or liquidate it. Your mortgage contract is between you and that bank, not the secured creditor. It is an asset or liability. Worst case is they liquidate and call in all loans and seize all deposits. "
Bank deposits ARE LIABILITIES, NOT ASSETS and creditors go after assets not liabilities. And one asset that they go after is your stream of period mortgage payments until your loan is paid in full. A right that they acquire by taken over your banker's previous position of creditor. A secure creditor CANNOT GO AFTER YOUR HOUSE. Only after your weekly or monthly payments, which you are liable to pay regardless of who gains the entitlement to such payments Thisis elementary. Full stop.
Depositors may lose their money above the insurance upper limit because a failed bank may not have the ability to realize enough cash to pay them in full after having been liquidated.
And generally speaking, deposit liabilities are given a more senior (or higher) position than other senior unsecured creditor claims. As such, they must be paid in full before other general unsecured claims could be met.
