Tag Archives: FDIC

At a hearing Thursday, two House Financial Services subcommittees came together to discuss the role of federal agencies in the creation of new mortgage servicing standards and settlements with the nation's largest mortgage servicers on foreclosure practices. Witnesses called for new universal standards for the servicing industry. ""Improving mortgage servicing will take both market reforms and regulatory reforms,"" said Mark Pearce of the FDIC.

Washington Mutual Inc.'s former executives, underwriters, and auditor reached a $208.5 million settlement in a class-action lawsuit by investors. The Seattle-based institution was the largest U.S. bank to fail, and this settlement is one of the largest resulting from the financial crisis. The class-action suit combined more than 20 cases in which investors claimed the bank misrepresented its financial condition when its loans began to fail after careless underwriting and inflated appraisals.

Reverse mortgage businesses accounted for a bigger share of industry casualties during the first half of 2011. Data released Tuesday shows that three lenders, which together made up 46 percent of the market for FHA's reverse mortgage program, called it quits earlier this year. The study noted that one factor impacting the dwindling sector is the possibility that borrowers will miss insurance or tax payments, which can trigger default on federally insured loans.

State and federal regulators shut down Mountain Heritage Bank in Clayton, Georgia, late Friday. It's the 14th FDIC-insured financial institution in the state to be closed this year. So far in 2011, 48 insured banks have been shuttered. At this time last year, the tally stood at 86. Mountain Heritage, which was founded in 2003, fell victim to the real estate downturn, with heavy losses on construction loans and mortgages for second homes.

The debate over what constitutes a Qualified Residential Mortgage (QRM) is heating up, with a pivotal argument centered around whether or not the proposed QRM stipulations will actually lower the risk of default. In one corner you have the handful of regulators charged with putting the definition of QRM into the rule book, and in the other corner you have just about everybody else, with consumer advocates joining mortgage bankers in a rare showing, and congressional lawmakers standing firmly alongside them.

Kentucky-based PBI Bank expects to enter into a consent order with the FDIC and the Kentucky Department of Financial Institutions, according to the bank's parent company, Porter Bancorp, Inc. The move will create benchmarks for the bank to improve its business, including enhancing asset quality, reducing loan concentrations, and maintaining capital levels.

State and federal regulators stepped in late Friday to shut down two lenders - First Commercial Bank of Tampa Bay in Florida and McIntosh State Bank in Jackson, Georgia. The closings bring the number of financial institutions on the FDIC's failed bank list to 47 for the 2011 calendar year and are expected to cost the federal agency $108.5 million.

The Office of the Comptroller of the Currency and the Office of Thrift Supervision have extended the deadline for 12 of 14 mortgage servicers to submit their plans for conducting foreclosure reviews. Under April's consent agreements, servicers are required to retain independent consultants to review all residential foreclosures processed in 2009 and 2010. Initially, servicers had until May 31st to submit their plans for these reviews, but at the request of the U.S. Justice Department, the deadline has been extended by 30 days.

Atlantic Bank and Trust in Charleston, South Carolina, was closed Friday by the Office of Thrift Supervision (OTS), bringing the count of FDIC-insured bank failures to 45 for the year. The FDIC brokered a deal with First Citizens Bank and Trust Company to assume the failed lender's deposits and purchase all of its assets.

Rep. Elijah Cummings has requested to see copies of the engagement letters between 14 mortgage servicers and the private consultants they've hired for foreclosure reviews. As part of the consent agreements with federal regulators to settle robo-signing allegations, the servicers are required to retain independent, third parties to review all 2009 and 2010 foreclosures. Consumer advocates have criticized the decision to allow the servicers to do the hiring, and Cummings says he wants to ensure regulators are holding them accountable.