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Chicago Bank is 2nd Bank Failure of 2017

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Mortgage Daily

                                                 January 30, 2017

The demise of a Chicago bank was the second bank failure this year. Another recent casualty was that of the seventh-largest reverse mortgage originator.

On Friday, the
Illinois Department of Financial and Professional Regulation Division of Bank reported that it seized Seaway Bank and Trust Co. in Chicago.

According to the state regulator, the financial institution operated in an unsafe and unsound manner — resulting in
insufficient capital to protect its depositors.

The failed bank was founded in
1965. As of Sept. 30. 2016, there were 181 people employed by Seaway.

Deposits totaled $307 million, while assets came to $361 million — including $84 million in residential loans, $98 million in commercial real estate loans and $10 million in construction-and-land development loans.

The state appointed the Federal Deposit Insurance Corp. as conservator.
In turn, the FDIC held a secret auction and awarded the winning bid to State Bank of Texas, which will assume all of Seaway’s deposits and purchase $309 million of its assets.

The cost to the FDIC’s Deposit Insurance Fund as a result of the failure is expected to be $57 million.

Seaway is the second bank failure of 2017.

Reverse Mortgage Solutions-Security One Lending stopped originating reverse mortgages as of Jan. 17, Reverse Mortgage Daily reported. Fewer than 200 employees are impacted by the decision.

RMS is a subsidiary of Walter Investment Management Corp. Data reported by Reverse Market Insight indicates that RMS was the seventh-largest originator of home-equity conversion mortgages last year with 1,996 HECMs endorsed.

Jen Tedeschi, who handles public relations at Buchanan Public Relations for Walter Investment, ignored a request for confirmation of the closing.

RMS is the first non-bank mortgage casualty of this year.

Mortgage Daily has tracked a total of three mortgage-related firms have either closed or failed in 2017.

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