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Reverse Lender Ends Originations, Bank Fails

Mortgage News

A nearly century-old financial institution in Oklahoma has been shuttered by bank regulators, while the reverse mortgage subsidiary of a big servicer has stopped originating new business.

In Freedom, Okla., the Oklahoma State Banking Department seized and shut down The Freedom State Bank on Friday.

Although the failed bank, which was originally established in 1919, survived the Great Depression, the Great Recession was apparently more than it could handle.

Just five people worked at the one-branch bank as of March 31.

Its $23 million in total assets included $2 million in residential loans and $1 million in commercial real estate loans. Total deposits were $21 million.

The Federal Deposit Insurance Corp. was appointed receiver by the Oklahoma State Banking Department.

Alva State Bank & Trust Co. assumed all of Freedom State Bank’s deposit for a 1 percent and purchased $18 million of its assets.

The FDIC estimated that its Deposit Insurance Fund will be depleted by $6 million as a result of the bank failure — the 12th so far this year.

Greenlight Financial Services has ended reverse mortgage originations.

The company’s origination platform was acquired by Nationstar Mortgage Holdings Inc. in May 2013.

“Our volume of reverse originations business was minimal,” a Nationstar spokesman explained in a written statement. “So we have decided to cease that portion of the reverse business and continue to focus intensely on our reverse servicing.”

The closing of Greenlight’s reverse origination business was the 10th among non-bank mortgage business closings tracked by Mortgage Daily so far in 2014.

Including banks and credit unions, Mortgage Daily has tracked 27 closings this year.

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