Mortgage-related failures among lenders are down 42 percent this year from this point in 2010. The improvement is entirely due to fewer failures among federally chartered banks; mortgage-related losses contributed to the same number of nonbank mortgage lenders and credit union failures this year as last.
So far during 2011, the casualty list of banks that have failed due to mortgage-related casualties stands at just 105. By this point in 2010, MortgageDaily.com had tracked 158 mortgage-related firms and businesses that had failed or closed.
This year, 74 federally insured banks have failed versus 127 that had failed by this point last year, according to a survey by MortgageDaily.com.
But despite the respite in bank casualties, former executives and directors of failed banks have faced more lawsuits by the FDIC. Among those institutions are IndyMac Bank, Silverton Bank and First National Bank of Arizona.
The FDIC reported that it had authorized lawsuits against 266 individuals for director and officer liability in connection with 30 failed institutions as of Aug. 4. Damage claims exceed $6 billion.
The FDIC, however, isn’t the only one suing.
Irwin Financial Corp.’s bankruptcy trustee filed a lawsuit against the former chairman and two executives seeking more than $0.5 billion. The trustee also sued the FDIC, claiming that banking regulators diverted a large tax refund and pressured Irwin executives to improperly infuse capital.
But the court in lawsuit by the NCUA against former officials of WesCorp ruled that the defendants weren’t liable.
A federal judge found that the former CEO and head of operations at failed Topdot Mortgage were liable for unpaid wages and overtime of 166 former employees.
This year’s high-profile casualties include Integra Bank, which had $2.2 billion in assets; Lydian Private Bank, which had $1.7 billion in assets; and $1.1 billion Bank of Choice.
PMI disclosed that regulators ordered it to stop writing new policies.
Bank of America said it will sell or close its correspondent lending unit. Nationstar Mortgage LLC is rumored to be conducting due diligence as part of a bid to acquire the unit.
For more information, visit www.realestateeconomywatch.com.
