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Regulators shut down seven banks on Friday, bringing the 2009 running total to 64 failures. The banks are estimated to cost the Federal Deposit Insurance Corp. (FDIC) a combined $812.6m. The Georgia Department of Banking and Finance shut down the six bank subsidiaries of Security Bank Corp., costing the FDIC’s insurance fund a combined estimated $807m. State Bank and Trust Co. assumes all $2.4bn of deposits of the six banks, whose 20 branches reopened Saturday as branches of State Bank and Trust. In addition to assuming all deposits, State Bank and Trust agreed to acquire $2.4bn of the banks’ $2.8bn of assets. The six banks involved were Security Bank of Bibb County, Security Bank of Houston County, Security Bank of Jones County, Security Bank of Gwinnett County, Security Bank of North Metro and Security Bank of North Fulton. State Bank and Trust had to receive $300m in capital infusions from 26 investors led by Joseph Evans in order to acquire the deposits and assets, the FDIC said. The New York State Banking Department shut down Waterford Village Bank, costing the FDIC’s insurance fund an estimated $5.6m. Evans Bank agreed to assume all of Waterford Village’s $58m of deposits and to purchase “essentially all” of the bank’s $61.4m of assets, entering a loss-sharing arrangement with the FDIC on $56m of these assets. Standard & Poor’s reviewed 663 residential mortgage-backed securities (RMBS) backed by Alt-A mortgages issued from 2005 through 2007. The ratings agency downgraded 6,198 classes from 611 of these transactions and affirmed ratings on 2,125 classes from these and 52 additional transactions. S&P removed from negative credit watch 4,166 ratings, 221 of which were affirmed while the rest were lowered. The ratings agency said the downgrades reflect its belief that credit enhancement for the affected classes will be insufficient to cover projected losses due to increased delinquencies and the housing market’s current condition. Fitch Ratings placed 238 bonds from 33 US commercial mortgage-backed securities (CMBS) transactions worth $9bn on Rating Watch Negative as part of its ongoing review of the CMBS portfolio. The ratings agency expects to resolve the watch negative during the next 90 days as it evaluates transactions issued from 2006 through 2008. Property preservation and field services provider Safeguard Properties on Friday announced mortgage giant Fannie Mae is providing reimbursement to servicers that pay counseling fees on behalf of borrowers to support delinquency resolution through the HOPE NOW Alliance of counselors, servicers, investors and other mortgage market professionals who conduct outreach efforts to borrowers at risk for foreclosure. Fannie extended the time period for servicers to request this reimbursement, Safeguard said, and is revising the process for servicers that submit multiple reimbursement requests. From Fannie’s announcement on the HOPE NOW initiative:

“Servicers may submit reimbursement requests for conventional or government mortgage loans held in Fannie Mae’s portfolio or that are part of an MBS pool that has the special servicing option or a shared-risk MBS pool for which Fannie Mae markets the acquired property. As stated in Lender Letter 02-08, servicers should maintain copies of counseling invoices, and must be able to submit them to Fannie Mae upon request. In addition, servicers must be fully aware of the status or outcome of all counseling efforts made by the counseling agency for a specific case. At least once each month, servicers should update their servicing system with the actions taken by a counselor. At a minimum, Fannie Mae expects the servicer to retain in its individual loan servicing records information related to the reason for the delinquency and any financial information obtained from the borrower.”

Barclays Capital on Friday updated the running total of mortgage-backed securities purchased by the Federal Reserve from Fannie Mae, Freddie Mac and Ginnie Mae. The Federal Reserve purchased $21.125bn net in agency MBS over the past week, Barclays noted, bringing its total net purchases to $681.9bn. Write to Diana Golobay.

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