Over 300 Mortgage-Related Failures
The number of non-bank mortgage companies to close eased last year, but bank and credit union failures soared, according to data released Monday by the Mortgage Graveyard, a journal of failed, ailing and acquired lenders. During 2008, 116 mortgage bankers and financial institutions were closed down, according to the Mortgage Graveyard, which is maintained based on data reported at Mortgagedaily.com. Failures, which generally involve companies with at least 50 employees, fell from a revised 160 tracked for the prior year. The Mortgage Graveyard has tracked 305 mortgage-related firms that have ended independent operations since the beginning of the credit crisis in 2006. "We've seen the capital crisis shift to financial institutions from unconventional mortgage bankers and non-agency securities," said MortgageDaily.com publisher Sam Garcia. "But TARP investments, Fed MBS purchases and the potential re-capitalization of ResCap point toward a strong first quarter for the mortgage sector." In 2008, 25 FDIC-insured institutions failed -- climbing from just three during all of 2007, according to the data. Among last year's most significant bank failures were Downey Savings and Loan Association, F.A., IndyMac Bank F.S.B. and Washington Mutual Bank -- the biggest bank failure in U.S. history. Credit union failures totaled 14 last year, based on data from the National Credit Union Administration. Only seven credit unions were closed in 2007. The biggest nonbank failures last year involved Fannie Mae (FNM) and Freddie Mac (FRE). Other notable 2008 closings included the wholesale division of Accredited Home Lenders Inc., which was one of the few lenders to survive the subprime meltdown; Carteret Mortgage Corp., which had employed around 1,700 people in 2007; and E-LOAN Inc., which had been an online lending pioneer. Write to Kelly Curran at email@example.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.