Tag Archives: FDIC

On Monday, January 31, the federal bank, thrift, and credit union regulatory agencies, along with the Farm Credit Administration began accepting federal registrations for licensing under the Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act. Under the SAFE Act, originators of residential mortgage loans employed by banks, savings, associations, credit unions, or Farm Credit System institutions must register with the registry, obtain a unique identifier from the registry and maintain their registrations.

State and federal regulators seized control of four more community-based lenders over the weekend - in Colorado, New Mexico, Oklahoma, and Wisconsin. That brings the failed-bank tally to 11 for the year. Commercial real estate (CRE) woes remain front and center for failed banks, according to the analysts at Foresight Analytics. In fact, for 10 of the 11 banks that have been shut down since the beginning of the year, the company says CRE loans contributed more than half of the banks' nonperforming loans.

Federal regulators took control of United Western Bank over the weekend after losses in 2009 and 2010 left the Denver-based bank ""undercapitalized and in an unsafe and unsound condition to transact business,"" according to the Office of Thrift Supervision. The institution's parent company called the seizure premature and indicated that the move will likely push it into bankruptcy. Three other smaller lenders were also shut down in Georgia, South Carolina, and North Carolina.

Experian announced this week that it will incorporate positive rental data into the traditional credit file in an effort to help underbanked consumers build credit. According to the FDIC Web site, an estimated 17.9 percent of U.S. households, roughly 21 million, are underbanked. Experian says having positive rental history reflected in their credit scores will help consumers who may have faced financial hardships such as foreclosure or bankruptcy rebuild their credit.

FDIC Chairman Sheila Bair warned mortgage bankers that failure to take immediate and decisive action to deal with breakdowns in servicing procedures will trigger a double-dip in U.S. housing markets and keep the industry deeply mired in a cycle of credit distress. Bair's fix includes instituting new fee structures so that servicers aren't forced to cut corners and establishing a claims commission funded by servicers to compensate borrowers who've been impacted by substandard practices.

The task force assembled by federal banking regulators to investigate the industry's servicing and foreclosure practices after the robo-signing scandal broke is expected to release the results of its findings as early as February. John Walsh, acting head of the Office of the Comptroller of the Currency, says on-site reviews by task force examiners are ""largely complete"" and federal agencies have begun the next phase of formulating actions that should be taken to ""fix problems in the mortgage servicing and foreclosure area.""

Oglethorpe Bank in Brunswick, Georgia, was shut down by state regulators over the weekend. The FDIC brokered a deal with Bank of the Ozarks in Little Rock, Arkansas to take over the operations of the failed lender. The Georgia bank marks the third bank closing of 2011, just two weeks into the new year. Bank of the Ozarks has been rapidly expanding its presence in the southeastern part of the United States. This is its fifth FDIC-assisted acquisition in the area within the past year.

Reports have surfaced that the FDIC is contemplating stricter requirements that would force banks to disclose what potential ramifications a loan modification on a first lien they service would have on an underlying lien. Industry analysts have speculated that servicers may be reluctant to modify a primary loan because the bank that services the loan also holds the second lien. Such an arrangement could be considered a conflict of interest and prompts some to wonder if investors would be swayed if they knew of the arrangement beforehand.

Just one week into the new year and regulators have moved to shut the doors on two community-based lenders -- First Commercial Bank of Florida in Orlando and Scottsdale, Arizona's Legacy Bank. Officials at the FDIC have said they expect bank failures to begin tapering off from last year, when a total of 157 financial institutions were shuttered and the lingering effects of bad real estate loans made at the height of the boom undermined many banks' balance sheets and left capital levels below regulatory requirements.

New guidelines released last month for real estate appraisals and evaluations will require any transaction originated or purchased by certain agencies to report conditions that affect the estimate of the collateral's market value. The Federal Financial Institutions Examination Council for real estate appraisals and evaluations require transactions to address the actual physical condition and characteristics as well as the economic and market conditions that may affect value.