Bank Failures Double

Bank Failures Double

DALLAS — (April 12, 2010) /PRNewswire/ This year has seen a big decline in the number of non-bank mortgage lenders to close down, according to the Mortgage Graveyard from MortgageDaily.com. But the improvement was more than offset by a spike in failed financial institutions. More than twice as many federally insured banks have failed compared to the same point in 2009.

From Jan. 1 through April 9, MortgageDaily.com tracked 55 mortgage related closings. At about the same point last year, 50 closings had been tracked.

The increase was fueled by bank failures, which doubled compared to a year earlier.

Among the most notable bank failures were Florida Community Bank, with losses from its collapse projected at $353 million; Appalachian Community Bank, which the FDIC expects to lose $419 million on; and Horizon Bank, where Deposit Insurance Fund costs are estimated at $539 million.

Even more significant were the closings of First Regional Bank, with expected losses of $826 million; Community Bank and Trust, which the FDIC expects to lose $828 million from; and La Jolla Bank, FSB, where $882 million in losses are projected.

Credit union failures jumped by half from 2009.

But non-bank mortgage operations to close were two-thirds lower than where they stood at the same point last year. One notable non-bank closing was that of Equitable Reverse Mortgage Co., which claimed to be “the 14th largest reverse mortgage lender in the nation.” Another company, Assurity Financial Services LLC, touted its standing as a “Top Non-Imploded” lender before throwing in the towel.

“We saw regulatory actions against U.S. financial institutions nearly double between the first-quarter 2009 and this year, suggesting the acceleration in bank failures is unlikely to abate,” said MortgageDaily.com Founder and Publisher Sam Garcia. “However, a thawing of the market for mortgage-related assets could help move some institutions out of the ‘troubled’ category.”