News, FDIC takes over two more banks. Wait. Is this even news any more? (loans, insurance)

[70Ford]

FDIC takes over two more failed banks - Mortgage Mess - MSNBC.com

CARSON CITY, Nev. - The 28 branches of 1st National Bank of Nevada and First Heritage Bank, operating in Nevada, Arizona and California, were closed Friday by federal regulators.

The banks, owned by Scottsdale, Ariz.-based First National Bank Holding Co., were scheduled to reopen on Monday as Mutual of Omaha Bank branches, the Federal Deposit Insurance Corp. said.

[Nor'Eastah]

Thank you so much for this post! I have been searching the web this morning, figuring some bank, somewhere, had to have failed by Friday night...or would we skip this week? Funny how these are getting to be "weekend jobs" - aren't the banks just as insolvent on weekdays?

Interesting times, indeed!

[HappyTexan]

It's not making headlines anymore..just a blip buried in the papers.
Are we supposed to be complacent about banks going belly up every Friday ?

[cpg35223]

Pretty much a lot of banks out west are going to get hammered, chiefly because they lent money in a really stupid manner. It's pretty amazing how reckless these guys. Didn't they remember the Savings and Loan crisis less than two decades ago? They probably do, but figure it couldn't happen to them.

[goodbyehollywood]

They're estimating that 70% of the loans originated in CA between 2002 and 2006 are Option ARMS. A majority of those borrowers are in way over their heads. The worst is yet to come in CA, so banks that did a lot of business there are in jeopardy.

With the outrageous housing prices in CA, these are big ticket loans. It's going to be difficult to absorb these losses.

[BankREO]

There is more to come. I reported on my blog about the FDIC getting retired bank failure specialist back to work to prepare for a wave of new bank failures. Many banks got very aggressive in the era of very cheap money.

[car54]

"CARSON CITY, Nev. - U.S. regulators took over two banks on Friday and sold them to Mutual of Omaha Bank..."


Presumably for pennies on the dollar. A merger would have been way more expensive, no? Okay, so the place is insolvent....but what about all that choice real estate on almost every street corner where their drive-thrus are located?

What about their hundreds of thousands of customers?

Might be a fantastic bargain for a solvent bank to buy these turkeys from the FDIC?

[POhdNcrzy]

As a mortgage industry professional, I find it just hilarious that this entire recent mortgage-financial crisis was simply caused by the marketing of goofy ARM loans instead of the traditional fixed rate mortgages.

In the past, most folks wouldn't touch an ARM mortgage with a ten-foot pole (stupidly so, BTW IMHO, although admittedly much less risky). For the most part, ARM loans were not popular and people didn't really know much about them (Which came first? The chicken or the egg?)

In recent years the housing bubble created by one A. Greenspan resulted in a huge demand for mortgages offering lower payments than fixed rate mortgage payments. Suddenly ARM loans seemed great! (hah hah)

Here's how it played out all over the country:

**Loan officer: "Just sign on the line folks and the home is yours, hey look how low your payment is!"

**USA borrower: "Wow thads much fine print hier! Guess we'll skip all that fine print, right honee? Mister loan officer, we don like to reed anywaaz, doz U think any1 reed this stuff? Anywayz, lets sign on da liens and go git a beeeer !"

HA HA HA, THAT IS HILARIOUS FOLKS !

oH yeah, here's how it played out a few years later in '07:

**USA borrower: "Hey honee, our paymont wint up $1,100 bucks a month! Sheeooot! Sumpin's wrong here I thunk. Shucks. We shor in heck can't pay this!"

Then the USA collapsed.

Ha ha ha, that is just too damn funny!

[POhdNcrzy]

Well folks, I'm resurrecting this stinker to merely point out that after 5 long months, my last post here seems more prescient than ever.

To wit,

America is indeed collapsing (it's less funny now, and more scary)

and

the foreclosure crisis can be explained as follows, (in even briefer terms)

Mr. Lying Mortgage Loan Officer: "Hello, would you like a cheap mortgage with a 2% interest rate? No really?"

American Homeowner: "Duh yeah, oh and by the way I am dumb."

Now I have to ask you folks for input, are Americans really THAT dumb and ignorant that they sign-up for ARM loans and don't even so much as GLANCE at the loan papers they sign at the closing?

Or is it that people desperately needed a lower payment and just signed-up for the ARM loans no matter what the fine print said would happen a couple years later when the note rate started adjusting based on the index + margin minus any applicable adjustment caps?

Personally, I think Americans REALLY ARE that ignorant and dumb?

P.S. I'm not a jerk or a troll, just stating the miserable FACTS....

[greggd]

I have read that a good % of the foreclosures are actually rentals, so apartments are not seeing a spike in activity yet.

The housing bubble and idea that prices would continue to rise fueled the spark of the recession, but there are a few other factors that came into play this year to make things worse.

The false assurance that mortgages were insured if foreclosed on (via AIG),
Speculation on the price of oil, ($150 a barrel in June/July and is now $35.)
predicitons of $200 a barrel were tossed around quite a bit back then.
Freezing of credit in all lines of business
Loss of Consumer Confidence
Lower retail sales from a country dependent on constant growth from money the consumer does not have or should not be spending on goods based on their income.
Lower retail sales from responsible consumers who are pulling back or waiting
due to confidence issues.

But yes, people don't read and don't plan for the long term.