DALLAS, TX - Driven by nearly 100 bank failures so far this year, mortgage-related failures and closings have already exceeded the total for all of last year and are within two failures of a record. From Jan. 1 through Oct. 2, there have been 164 mortgage-related firms that have either collapsed or been shut down, according to the Mortgage Graveyard - a journal of failed lenders that is maintained by MortgageDaily.com.
During all of 2008, a revised 124 mortgage-related firms either failed or were closed down. The increased activity is attributable to a burst of bank failures. As of Friday, 98 federally insured institutions have failed this year - nearly 300 percent higher than in all of 2008.
The number of mortgage-related closings in 2007 was a revised 165, the highest level since MortgageDaily.com began tracking failed lenders in 1998. But 2007's activity included only three banks.
Among this year's biggest failures have been BankUnited, FSB, which failed in May; Guaranty Bank, which was seized in August; and Taylor, Bean and Whitaker Mortgage Corp., which collapsed after it was suspended by FHA, Freddie Mac and Ginnie Mae in August.
"We are likely to see 2009's mortgage-related closings rise to more than 200 firms by the end of the year," said MortgageDaily.com Founder and Publisher Sam Garcia. "Based on the rising number of regulatory orders being issued against financial institutions - the pace of bank failures is likely to get worse before improving."
Last month, MortgageDaily.com tracked more than 100 regulatory actions against U.S. financial institutions - including 56 cease-and-desist orders and 27 removal-and-prohibition orders.
Because of the rapid pace of bank failures, the Federal Deposit Insurance Corporation - which insures bank deposits - is proposing to collect three years of risk-based assessments in advance this year so that its Deposit Insurance Fund has enough capital to handle upcoming failures.
Source: MortgageDaily.com