I have a mortgage with a high variable rate and a prepayment penalty clause. How can I tell if my institution is failing or failed and if so, am I in a good position to renegotiate my interest rate or principal?
In most cases a failed institution is like being drunk. You don't know when you've had enough until you've had too much, so you won't know that they failed until they do.
Even after a failure, there is no guaranty that you will get a better deal. That is an unknown. Call your lender, explain that you're looking for a better deal on your loan and ask what they may be able to offer. You can also seek out another loan, a refinance, from a different lender. Depending on your area and the lenders, you may or may not get a better deal. You can seek out just lenders who won't charge you an application fee if you want to keep your costs down.
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In most cases a failed institution is like being drunk. You don't know when you've had enough until you've had too much, so you won't know that they failed until they do.