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Tag Archives: FDIC

CoreLogic’s AVMs Comply with New Federal Standards

CoreLogic says its automated valuation models (AVMs) can assist mortgage lenders in complying with the new federal standards on property valuations. The new standards were released December 2 by the five federal bank regulatory agencies, and emphasize the need for risk-focused appraisal reviews, rigorous AVM testing, enhanced documentation of property condition, and valuation updates during the life of the loan.

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Regulators Shut Down Six Community-Based Lenders

State and federal regulators closed six lending institutions over the weekend -- three in Georgia and one each in Arkansas, Florida, and Minnesota. It brings the number of bank failures for the year to 157, and follows news last week that the FDIC has lowered its operating budget for 2011 based on the expectation that institutional closings will slow in the year ahead. The largest of this weekend's closings was the Bank of Miami in Coral Gables, Florida, with $374.2 million in deposits and assets totaling $448.2 million.

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FDIC Lowers Budget as Bank Failures Slow

The number of bank closings has slowed in recent months, and that's given the FDIC reason to believe that the worst phase of institutional collapses is behind us. The FDIC's board of directors has approved a $3.96 billion operating budget for 2011, which the agency described as ""down slightly from the 2010 budget,"" when the board raised the amount by 55 percent to cope with an elevated number of bank failures. Officials are touting the fact that no increase is planned for the upcoming year as a sign the financial sector is at least stabilizing.

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New Regulatory Rule to Support Foreclosure-Ridden Neighborhoods

Federal regulators on Wednesday announced changes to the Community Reinvestment Act (CRA) parameters to support communities affected by high foreclosure levels. The final rule encourages depository institutions to finance development projects in areas that qualify for HUD's Neighborhood Stabilization Program (NSP). Institutions will receive CRA credit for any NSP-eligible activities, such as loans extended to grant recipients to buy foreclosed homes or a donation of REO properties to a nonprofit housing organization.

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Regulators Close Michigan and Pennsylvania Community Lenders

After a three-week lull, bank closings have returned. State and federal regulators shut down two community-based lenders on Friday, one in Michigan and one in Pennsylvania. There have been 151 bank failures so far this year. The FDIC said last month that its list of so-called problem banks has grown. There are now 860 insured financial institutions under greater scrutiny from the federal agency because capital levels have fallen dangerously low.

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FDIC Launches Investigation of Officials of Failed Banks

In a move reminiscent of the last time the United States was in such dire financial straits, the FDIC announced recently that it has begun an investigation of executives and other employees of failed banks. In the 1980s and 1990s, the savings and loan (S&L) crisis prompted the government to investigate and prosecute hundreds of bank insiders, sending more than 1,000 to prison, and collecting $4.5 billion. This time around, the FDIC has opened more than 200 civil cases and is seeking to recover around $2 billion.

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Bank Risk Managers Say Credit Demand Will Rise Faster Than Supply

The credit analytics firm FICO has released the results of its fourth-quarter survey of bank risk professionals. The consensus is that lending will remain tight well into next year and a greater number of banks could face failure, but fewer bankers believe delinquency rates for home loans will keep rising. But FICO says until lenders put the problems in their mortgage portfolios behind them and see sustained growth in employment, the significant gap between credit demand and credit supply is unlikely to close.

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Federal Reserve and Other Agencies Release New Appraisal Guidelines

Federal regulatory agencies issued guidelines Thursday on sound practices by financial institutions for real estate appraisals and evaluations. The guidelines explain the agencies' minimum standards for appraisals and incorporate the agencies' recent supervisory issuances on appraisal practices. The 70-page document will replace the former guidelines which were written in 1994, and officials say it will ensure consistency in the application and enforcement of appraisal regulations.

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Three More Community-Based Lenders Closed by Regulators

State and federal regulators stepped in to close the doors on three community banks this weekend, in Florida, Pennsylvania, and Wisconsin. They bring the number of insured institutions on the FDIC's failed bank list to 149 for the year. By comparison, in all of 2009 there were 140 banks shuttered. First Banking Center in Burlington, Wisconsin, was the largest of this weekend's closings, with $664.8 million in deposits and $750.7 million in assets.

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Servicers with Widespread Paperwork Errors May Face Regulatory Fines

Federal banking regulators are in the process of conducting an in-depth review of foreclosure practices at the nation's largest mortgage servicers, which includes on-site evaluations and examinations of loan files. Officials say in cases where problems are found, regulators will require lenders and servicers to correct not only the faulty documents but the faulty systems that allowed them to occur. One Federal Reserve governor says institutions with ""widespread problems"" could also be subject to fees and penalties.

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