twitter linkedin
facebook google+
Search:

Mortgage News

News by Subject
Complete list of specialty news sections.

Purchase Subscription
Subscribe to MortgageDaily.com and get immediate access to all news, statistics and archives.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Consumer Mortgage News
Free mortgage news for prospective borrowers.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories free on your Web site or for your RSS reader.

News Archives
Archive of MortgageDaily.com stories by month going back to 1999.

Press Releases
Reports and announcements from MortgageDaily.com.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Directories
Directories of lenders, branch operators and mortgage service providers.

Mortgage Graphs
Directories of lenders, branch operators and mortgage service providers.

home subscribe advertise reprints e-mail help RSS about us LOG IN

Mortgage News

 

Mortgage News

HOT Topics

production

servicing

compliance

legal

fraud

secondary

jobs

appraisal

site map

www.loan-academy.com/
The Mortgage Graveyard
Failed, closed and a c q u i r e d mortgage-related entities.



Small Bank Failures Driven by 1 Loan Type

10 states had higher number of bank failures

June 14, 2013

By Mortgage Daily staff

A government report identified less than a dozen states with an elevated number of bank failures and found that one category of loans was frequently at the heart of their problems. The report also found that credit losses should have been recognized earlier.

Between 2008 and 2011, there were 414 bank failures, including commercial banks and thrifts. Ten states had at least 10 bank failures.

The 10 states were concentrated in the West, Midwest and Southeast and had seen strong housing market growth during the prior decade.

The findings were discussed in the report, FINANCIAL INSTITUTIONS Causes and Consequences of Recent Community Bank Failures, released Thursday by the Government Accountability Office.

The 20-page report was prepared because of concerns about the accounting and regulatory requirements needed to maintain reserves large enough to absorb expected loan losses.

The report indicated that the failure of banks in the 10 states with less than $1 billion in assets was largely driven by losses on commercial real estate loans -- especially construction-and-development loans. Small financial institutions accounted for 85 percent of all bank failures during the studied period.

In addition, many of the failed banks often pursued aggressive growth strategies using nontraditional, riskier funding sources. They also had weak underwriting and credit administration practices.

The report also highlighted how the impact of the financial crisis could have been lowered with earlier recognition of credit losses.

"The accounting model used for estimating credit losses is based on historical loss rates, which were low in the pre-financial crisis years," the report said. "In part due to these accounting rules, loan loss allowances were not adequate to absorb the wave of credit losses that occurred once the financial crisis began.

"Banks had to recognize these losses through a sudden series of increases (provisions) to the loan loss allowance that reduced earnings and regulatory capital."

A proposal was issued in December 2012 by the Financial Accounting Standards Board for a loan loss provisioning model that is more forward looking and incorporates a broader range of credit information.

"This would result in banks establishing earlier recognition of loan losses for the loans they underwrite and could incentivize prudent risk management practices," the GAO said. "It should also help address the cycle of losses and failures that emerged in the recent crisis as banks were forced to increase loan loss allowances and raise capital when they were least able to do so."

full GAO report


next story

back to current headlines


Bank news


Corporate Mortgage News
M e r g e r s, a c q u i s i t i o n s and private and public offerings. Other corporate activity including executive appointments, bankruptcies name changes.


Financial Regulation News | Mortgage Regulations
Bank and mortgage regulators, regulations and regulatory actions. Coverage of regulatory legislation and testimony.

www.mortgagebranchmanagerjobs.com
Logout forgot
password?

SUBSCRIBERS: Edit Subscription | Subscription Help | or call 214.521.1300

Subscribe Contact Us Site Map

Copyright © 2017 Mortgage Daily, D a l l a s
Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

p r i c i n g engine directory

wholesale lender directory

More Mortgage News Resources (full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter

MBS

mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

real estate news

refinance news

reverse mortgage news

secondary marketing

social media

servicing news

subprime news

wholesale lenders