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

2011 Bank Failures On Track for 3-Year Low

Recent mortgage-related closings and failures

Dec. 18, 2011

By staff

After several consecutive weeks of no U.S. bank failures, regulators put an end to the streak. But this year will likely see fewer than a hundred bank failures -- the lowest level in three years. A wholesale lender has suspended new business and a reverse mortgage correspondent lender has restricted its purchases.

On Friday, the Florida Office of Financial Regulation took control of Premier Community Bank of the Emerald Coast. It was the first bank failure since Central Progressive Bank was closed on Nov. 18.

Premier was established in 2006. As of Sept. 30 it had 21 employees. Total deposits at the Crestview, Fla., bank were $112 million. Total assets stood at $126 million and included $19 million in home loans, $26 million in commercial real estate assets and $20 million in construction-and-development holdings.

The Federal Deposit Insurance Corp., which was named receiver, sold all of Premier's assets to Summit Bank, though the regulator agreed to share losses with Summit on $98 million of the assets. The FDIC had issued a cease-and-desist order against Premier in January.

The demise of Premier is expected to deplete the Deposit Insurance Fund by $31 million.

The cost of the next bank to fail Friday, Western National Bank, was pegged at $38 million. The Office of the Comptroller of the Currency closed down the Phoenix-based bank and handed it off to the FDIC as receiver.

Headcount at Western National was 23 people. Deposits at the six-year-old bank totaled $145 million, while total assets amounted to $163 million and included $25 million in residential loans, $38 million in CRE loans and $69 million in C&D loans.

The OCC issued a capital directive to Western National on April 4 and entered a formal agreement with the bank in October 2009.

Washington Federal picked up all of the assets and deposits of the failed bank from the FDIC.

Western National was the 92nd FDIC-insured bank to fail this year. At the recent pace of bank failures, the total could fall below 100 for the first time since 2008, when just 25 federally insured bank failures occurred.

Since 2007, the cost of the country's 400 bank failures was an estimated $88 billion, Bloomberg reported.

A comprehensive settlement has been reached by bankrupt Washington Mutual Inc. with certain significant parties in its chapter 11 proceedings, according to a Dec. 12 announcement from the former parent of Washington Mutual Bank. The bankruptcy court must approve the agreement, which calls for creditors to fund a re-organized WaMu to the tune of $75 million each.

"The comprehensive settlement announced today represents a fair and reasonable recovery for the thousands of equity holders of the company who have been following this case closely for three years," Michael Willingham, chairman of the equity committee appointed in WaMu's chapter 11 proceedings, said in the statement. "The equity committee and its advisors are pleased with the result and look forward to and support the swift confirmation of the plan."

O.U.R. Federal Credit Union was liquidated by the National Credit Union Administration on Dec. 2. The Eugene, Ore., institution was chartered in 1969 and thrown into conservatorship in June of this year. It had 1,379 members and held around $4 million in total deposits. Some of its assets and deposits were acquired by Northwest Community Credit Union.

"NCUA made the decision to liquidate and discontinue the operations of O.U.R. Federal Credit Union after determining the credit union was insolvent and has no prospect for restoring viable operations on its own," the statement said.

On Nov. 30 the NCUA liquidated BCT Federal Credit Union. The same logic was cited for the decision to shutter the Binghamton, N.Y., credit union, which went live in 1941 and was placed in conservatorship in June.

BCT had 3,900 members and $41 million in deposits. It served employees of public, private and parochial schools. Visions Federal Credit Union assumed BCT's assets, liabilities and member shares.

Foothill Ranch, Calif.-based O2Funding has suspended applications and rate locks, according to a notice on its website. The company describes itself as "a newly formed mortgage banking company focused on serving the wholesale and correspondent markets."

O2, which anticipates re-opening its lock desk by March 2012, blamed "year-end volumes and current market conditions" for the move.

MetLife Bank has stopped buying reverse mortgages from loan correspondents if a mortgage broker originated the loan, a spokesman confirmed in a statement. The change takes effect next month and isn't expected to result in any staffing cuts.

The move does not impact retail reverse mortgage originations, and MetLife will continue to buy broker business through its own wholesale channel and acquire loans were originated directly by the correspondent.

As of this month, Home Federal Bancorp Inc. stopped originating residential mortgages for sale in the secondary market, according to a Securities and Exchange filing.

"Rather, we will refer nearly all of residential mortgage loan applications to a third party originator that will underwrite and close the mortgage funding for the bank's clients," the filing stated. "While we may choose to directly originate some residential mortgage loans for our own portfolio from time to time, we expect very few residential mortgage loans will be originated by the bank for its portfolio or for sale in the secondary market after December 2011."

Steven J. Baum P.C. will close down and layoff 89 people, the Associated Press reported. The company, one of the largest-volume mortgage foreclosure law firms in New York, gained notoriety from a photograph taken at a company party of employees mocking foreclosed borrowers.

From Jan. 1 through Dec. 16, Mortgage Daily has tracked to closing or failure of 130 mortgage-related entities.

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