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

Mortgage Obituaries

Recent mortgage-related business closings

Sept. 8, 2009

By staff

Last week was exceptionally brutal, with the failure of five banks on Friday and a credit union on Monday. Two companies have apparently failed in their attempts to convert from mortgage bankers to mortgage brokers.

On Friday, the Missouri Division of Finance took possession of First Bank of Kansas City and handed it to the Federal Deposit Insurance Corporation as receiver. The Kansas City, Mo., bank's $15 million in deposits as of June 30 were assumed by Great American -- which also acquired all of its $16 million in assets.

"The demise of this bank was due to poor risk selection and aggressive lending practices of prior management, resulting in substantial investment in high-risk loans," Division of Finance Commissioner Richard J. Weaver said in an announcement. "Many of these loans proved uncollectible and the losses were more than the bank could support."

The FDIC expects to lose just $6 million on the failure of 108-year-old institution, which had just 28 employees.

Next to go was InBank, which was closed by the Illinois Department of Financial and Professional Regulation, Division of Banking. MB Financial Bank, N.A., assumed around $199 million in non-brokered deposits as of June 30 and purchased all of the Oak Forest, Ill., bank's $212 million in assets, including $39 million in residential loans, $71 million in commercial mortgages and $33 million in construction-and-land-development assets.

InBank was founded in 1970 and employed 61 people. Charges to the Deposit Insurance Fund from InBank's failure were projected at $66 million.

Friday's third bank failure was Vantus Bank, which was closed by the Office of Thrift Supervision and passed on to the FDIC as receiver. Great Southern Bank then assumed all of the Sioux City, Iowa, institution's $368 million in deposits and acquired around $387 million of its $458 million in assets with the FDIC sharing in losses on $338 million. Assets included $95 million in home loans, commercial mortgage oustandings of $116 million and construction-and-land-development holdings of $31 million.

"Vantus was undercapitalized, with no reasonable prospect of becoming adequately capitalized, and was unlikely to be able to pay its obligations or meet its depositors' demands in the normal course of business," according to the OTS -- which issued a prompt corrective order against the bank in May.

Vantus Bank parent First Federal Bankshares Inc. reported an $18 million second-quarter loss, is losing its chief executive officer this month and warned last month about its ability to continue in business. Around $168 million in FDIC losses are forecasted as a result of the failure of 149-employee institution, which was established
in 1923 and consented to a cease-and-desist order on July 31.

The OTS also closed Platinum Community Bank in Rolling Meadows, Ill. The FDIC, which was appointed receiver, couldn't find a buyer and worked out a deal for MB Financial Bank, National Association, to help depositors as the failed institution is liquidated.

Around 237 employees worked at Platinum before it failed.

Platinum, founded in 1999, had $305 million in deposits and $346 million in assets as of June 30, including $48 million in residential holdings, $7 million in commercial mortgages and $3 million in construction-and-land-development loans. The FDIC expects to lose $114 million on its collapse.

No. 5 to go Friday was Flagstaff, Ariz.-based First State Bank, which was seized by the Arizona Department of Financial Institutions after the state found that "the bank's financial condition was unsafe and unsound." As receiver, the FDIC made a deal with California's Sunwest Bank to assume all of First State's $95 million in deposits and acquire its $105 million in assets, including $10 million in one- to four-unit mortgages, $33 million in commercial mortgages and $28 million in construction-and-land-development loans.

First State was established in 1998 and employed just 27 people. It faced a May 1 FDIC cease-and-desist order. The FDIC projected losses of $47 million from First State's failure -- the 89th FDIC-insured bank to fail this year.

The California Department of Financial Institutions shut down Kaiser Lakeside Credit Union on Aug. 30 and appointed the National Credit Union Administration as liquidating agent. SafeAmerica Credit Union purchased some of Kaiser's $24 million in assets. The 56-year-old credit union had 3,500 members.

Kaiser was the ninth credit union failure tracked during 2009 by

A recent casualty reported by the Mortgage Lender Implode-O-Meter was Winston-Salem, N.C.-based Granite Mortgage Inc. The company had recently converted to a mortgage broker from a mortgage banker.

The Arizona Daily Star reported that Tucson, Ariz.-based Home Loan Executives is on the verge of collapse. In addition to losing nearly $2 million in 2007 and 2008, employment at the former First Magnus subsidiary had been reduced to 30 from 120 earlier this year. Home Loan reportedly transitioned to a mortgage broker last year, while an attempted merger with Dallas-based Supreme Lending fell apart this summer.

Published reports indicated that Taylor, Bean and Whitaker Corp. missed an Aug. 31 deadline to petition the suspension of its Florida origination license.

In all, 147 mortgage-related failures have been tracked during 2009 by

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