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

Wholesaler Joins 3 Banks on Casualty List

Recent mortgage-related casualties

May 22, 2011

By staff

Three banks were seized by state regulators last week, while a wholesale lender is calling it quits. In all, more than five dozen mortgage lending operations that were shut down this year have been tracked by Mortgage Daily.

On Friday, the Georgia Department of Banking and Finance said it obtained an order from the Superior Court of Heard County authorizing it to take possession of First Georgia Banking Co. The bank was handed it over to the Federal Deposit Insurance Corp. as receiver.

The state is authorized to take such actions under the Official Code of Georgia, Section 7-1-150(a), "whenever such financial institution is either insolvent or operating in an unsafe or unsound condition to transact its business, is operating in violation of any court order, statute, rule or regulation, or requests the department to take possession of its business and property."

It was the same story for Atlantic Southern Bank in Macon, with Georgia regulators obtaining an order from the Bibb County Superior Court and handing the institution over to the FDIC.

Franklin-based First Georgia had $731 million in total assets -- including $164 million in home loans, $185 million in commercial real estate assets and $103 million in construction-and-development loans. It also had $702 million in deposits as of March 31. First Georgia was established in 2003 and had 158 employees.

Eleven-year-old Atlantic Southern, based in Macon, had total assets of $742 million and deposits of $708 million. The 149-employee institution owned $91 million in residential loans, $235 million in CRE assets and $177 million in C&D loans. An FDIC cease-and-desist order was issued against the bank in September 2009.

Both failed banks were picked up by CertusBank, N.A., which negotiated loss-sharing agreements with the FDIC for $585 million on Atlantic's assets and $452 million for First Georgia's assets.

Losses to the U.S. Deposit Insurance Fund have been estimated at $274 million for Atlantic and $157 million for First Georgia.

Moving on to the West Coast, the Washington Department of Financial Institutions closed down Summit Bank. The regulator cited "inadequate capital and severe loan losses" in its decision to seize the 36-employee bank.

Summit had total assets of $143 million -- including $34 million in one- to four-unit residential assets, $33 million in commercial mortgages and $14 million in construction-and-land-development holdings. It was hit with three FDIC orders including a prompt corrective action in March, a civil money penalty of $11,280 in April 2010 and a cease-and-desist order in June 2010.

Stepping in as receiver, the FDIC awarded the winning bid for the failed bank to Columbia State bank. The FDIC agreed to a loss-sharing arrangement on $113 million of the Burlington, Wash.-based bank's assets. Losses from Summit's failure are expected to come in at $16 million.

Summit Bank, founded in 1914, was the 43rd FDIC-insured failure so far during 2011.

Hmong American Federal Credit Union, which was placed into conservatorship by the National Credit Union Administration earlier this month, was liquidated on Wednesday, the NCUA announced. The 700-member institution had less than $3 million in assets.

Merit Mortgage Services has advised its loan correspondents of its decision to exit the mortgage business.

We will no longer accept any loan applications, and any loan currently in the pipeline must be funded by May 31," the statement said.

Merit was based in Gardena, Calif. On its matrix are conforming, government and manufactured housing loans.

Including Merit, which was the eighth failed non-bank lender tracked by Mortgage Daily in 2011, there have been 63 mortgage-related operations tracked that have closed down or failed this year.

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