|Faced with the loss of its approval with Fannie Mae, BankUnited, FSB, voluntarily abandoned the relationship and disclosed plans to kill its wholesale lending business. But the move may not be enough to prevent the company from failing.
The Coral Gables, Fla.-based institution notified Fannie on March 12 that it was voluntarily terminating its mortgage selling and servicing contract with the secondary lender, according to a filing with the Securities and Exchange Commission by parent BankUnited Financial Corp.
"Fannie Mae had valid and sufficient cause to terminate the contract with cause as of March 12," BankUnited acknowledged in the letter. "Fannie Mae accepts this notice and agrees that such termination shall be effective immediately, notwithstanding any other language in the contract to the contrary."
The letter went on to say that Fannie now owns the servicing rights to the loans BankUnited had been servicing, and that the bank is still obligated under the terms of the agreement. The bank will write off $16 million in servicing assets as a result of the termination.
The transfer of servicing is planned for April 1, when all funds, files and records relating to the servicing portfolio will be turned over to Fannie.
BankUnited noted that the termination of the contract "was consistent with the company's strategy of no longer being active in the wholesale residential lending business."
The SEC filing also said that the filing of BankUnited's annual report is still delinquent because of adverse market conditions, complex accounting and issues about disclosures. The firm has no idea when its report will be ready.
BankUnited said that it has negative shareholder equity and warned, "there is substantial doubt about the company's ability to continue as a going concern." A similar alarm was sounded in December 2008.
In September 2008, the bank said it would eliminate 160 positions -- about 12 percent of its workforce at the time. The layoffs were primarily from the residential lending support and operations.