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

3 Credit Unions, 1 Bank Collapse

Recent financial institutions to fail

June 25, 2011

By staff

Just one small bank failed last week. But the news wasn't so good for federally insured credit unions.

In Clayton, Ga., the Georgia Department of Banking and Finance took possession of Mountain Heritage Bank. The institution was handed over to the Federal Deposit Insurance Corp. as receiver.

The bank was founded in November 2003. Around 20 employees were on staff at the time of its demise.

As of March 31, total assets at Mountain View stood at $104 million. Assets included $20 million in one- to four-unit residential mortgages, $6 million in commercial real estate loans and a hefty $27 million in risky construction-and-development loans. Total deposits were $90 million.

The FDIC issued a cease-and-desist order against Mountain Heritage in June 2009.

Following a secret bidding process for the bank's assets and deposits, the FDIC accepted an offer from First American Bank and Trust Co. On Monday, branches of the failed bank will open under the moniker First American.

In order to entice the acquiring bank to take over the troubled assets of Mountain Heritage, the FDIC agreed to share in losses on $69 million of the assets involved in the transaction. The arrangement, according to the FDIC, is expected to wind up depleting the Deposit Insurance Fund by $41 million -- a huge amount given that total assets barely exceeded a hundred million dollars.

Including First American, 48 federally insured banks have filed so far this year.

While the casualty count for banks was minimal this past week, there were three credit unions that were seized on Friday.

The National Credit Union Administration took control of O.U.R. Federal Credit Union. The Eugene, Ore.-based organization was placed into conservatorship and will be operated with expert management in place while the regulator works to correct operational deficiencies.

"The Federal Credit Union Act authorizes the NCUA board to appoint itself conservator when
necessary to conserve the assets of a federally insured credit union, protect members' interests, or protect the National Credit Union Share Insurance Fund," the regulator explained in a statement.

The 2,184 members of O.U.R. are residents of Lane County who have participated within the past 12 months in programs of the
County's Department of Community Health and Social Service. Assets stood at only $4 million as of its seizure.

Another credit union thrown into conservatorship, Borinquen Federal Credit Union, serves 8,600 members from a low-income Philadelphia community. The 37-year old firm had just $7 million in assets.

In the case of 65-year-old St. James A.M.E. Federal Credit Union, the NCUA liquidated the Newark, N.J., institution and sold its $1 million in deposits to North Jersey Federal Credit Union. The 831-member credit union served the members of two local churches.

Mortgage Daily has tracked 16 credit unions this year that have either been liquidated or placed in conservatorship.

Including banks, credit unions and non-bank lenders -- 74 mortgage-related closings or failures have been tracked during 2011.

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