In addition to two banks that failed last week, a wholesale lender that boasted about its launch last year as other wholesalers were closing shop has now itself closed shop. Other corporate obituaries include a Maryland mortgage investor that has gone bankrupt.
Following the approval of a petition by the Ingham County Circuit Court for the Michigan Office of Financial and Insurance Regulation to appoint the Federal Deposit Insurance Corp. as receiver, the state Friday seized Paramount Bank in Lansing, Mich.
The bank was founded in February 1998 and had 36 employees. A prompt corrective action was taken against Paramount in August, while the bank and parent Paramount Bancorp were forced into a formal written agreement with the Federal Reserve Bank of Chicago and the Michigan Office of Financial and Insurance Regulation in October 2008.
Level One Bank’s bid to assume $214 million in deposits at par was selected by the FDIC. Level One also acquired the failed institution’s $253 million in assets — including $83 million in home loans, $111 million in commercial real estate loans and only $2 million in risky construction-and-land-development loans.
Factoring in a $233 million loss-share agreement, estimated costs to the nation’s Deposit Insurance Fund are $90 million.
After that, Earthstar Bank was closed by the Secretary of Banking of the Commonwealth of Pennsylvania and handed over to the FDIC. The nine-year-old institution faced an FDIC cease-and-desist order in April and another in 2008.
Polonia Bank picked up Earthstar’s $105 million in deposits at par and acquired $77 million of its $113 million in assets with the FDIC sharing in losses on $46 million of the assets. Among the assets were $51 million in residential loans, $17 million in commercial mortgages and $2 million in C&D loans.
Earthstar’s failure, the 151st FDIC-insured failure this year, is expected to deplete the Deposit Insurance Fund by $23 million.
More details were recently provided about the Nov. 30 liquidation of Constitution Corporate Federal Credit Union by the National Credit Union Administration. The failed credit union’s operations have been transferred to Members United Bridge Corporate Federal Credit Union.
Silver Spring, Md.-based KH Funding filed for Chapter 11 bankruptcy protection following the loss of its registration with the Securities and Exchange Commission, The Gazette reported. KH has an investment portfolio of residential first and second mortgages and commercial mortgages.
In February 2009, Virgin Money USA Inc. announced that it was diving “headfirst” into wholesale lending.
Virgin Group founder and chairman Sir Richard Branson noted in last year’s announcement, “At a time when others are exiting the mortgage space, leaving consumers with fewer financing options, Virgin Money is jumping in with its wholesale mortgage program.”
But the British knight has had an apparent change of heart.
Virgin Money has exited the U.S. market and ceased operating, US Banker reported.
A Virgin spokeswoman ignored a request for more information.
Mortgage Daily has tracked the closing or failure of 192 mortgage-related operations during 2010.
