A look at stories across HousingWire’s weekend desk…with more coverage to come on bigger issues:
The Federal Deposit Insurance Corp. (FDIC) announced that four banks were closed last week.
The New York State Banking Department closed New York City-based LibertyPointe Bank. The closure announcement came on Thursday, instead of Friday, when the FDIC normally makes such disclosures.
The three LibertyPointe branches reopened Friday as branches of Valley National Bank, under the terms of a purchase and assumption agreement the FDIC made with the Wayne, NJ-based bank. Valley National Bank will pay the FDIC a premium of 0.15% to assume all of the deposits of LibertyPointe Bank. In addition to assuming all of the deposits, Valley National Bank agreed to purchase essentially all of the failed bank’s assets. The FDIC estimates the cost to the Deposit Insurance Fund (DIF) will be $24.8m.
On Friday, three more banks closed. The New York State Banking Department also closed New York City-based The Park Avenue Bank. Its four branches also reopened as branches of Valley National Bank. Valley National Bank will pay the FDIC a premium of 0.15% to assume all of the deposits of The Park Avenue Bank. In addition, Valley National Bank agreed to purchase essentially all of the assets. The estimated cost to the DIF is $50.7m.
The Florida Office of Financial Regulation closed Orlando-based Old Southern Bank. The seven Old Southern Bank branches reopened as branches of Conway, Arkansas-based Centennial Bank, which will pay the FDIC a premium of 1% to assume all of the deposits of Old Southern Bank. In addition, Centennial agreed to purchase essentially all of the failed bank’s assets. The estimated cost to the DIF is $94.6m.
The Louisiana Office of Financial Institutions closed Covington-based Statewide Bank. The six branches reopened as locations of Lafayette-based Home Bank, which did not pay the FDIC a premium to assume all of the deposits of Statewide Bank and agreed to purchase essentially all of the failed bank’s assets. The estimated cost to the DIF is $38.1m.
National retailers are concerned that mall real estate investment trust (REIT) Simon Property Group’s (SPG: 82.43 +0.43%) proposed $10bn takeover of rival REIT General Growth Properties (GGP: 14.66 -0.61%) would result in too much market power, and as a result, antitrust criticism against Simon continues to build, according to a report in The Wall Street Journal.
The report cites Green Street Advisors data that said should Simon succeed its in proposal, the combined company would own roughly half of the 300 US malls with the highest sales. A number of large members in the National Retail Federation have complained to the trade group that the deal would give Simon the power to dictate higher rents and sway store openings and closings, the report said.
Simon, already the country’s biggest mall owner, made its unsolicited offer public in mid-February. However, GGP has formed its own restructuring plan, which would result in a combined $6.5bn cash infusion from three sources — GGP’s largest shareholder, its largest creditor and Brookfield Asset Management (BAM: 24.73 -0.08%), the Canadian-based real estate developer.
Loss severities on distressed US residential mortgages are likely to rise this year as several key government support programs expire, according to Fitch Ratings.
Low mortgage rates, the homebuyer tax credit and government directed loan-modification programs have led to an improvement in home prices and loss severities since Q209, Fitch said. But the expiration in the coming months of both the homebuyer tax credit and the Federal Reserve’s $1.25trn mortgage-backed securities (MBS) purchase program will increase negative pressure on home prices and loss severities, according to senior director Grant Bailey.
“Servicers are further along in identifying borrowers ineligible for modifications and will likely be more aggressive in liquidating those loans this year compared to last,” said Bailey. “Less costly alternatives to foreclosure, such as short-sales, should help stem rising loss severities due to the lower costs and speed of the resolution.”
The government of Tanzania, the country in SouthEast Africa, is negotiating with the World Bank for a line of credit worth $40m to develop a residential mortgage market, development of housing microfinance, and expansion of an affordable housing supply, this according to a report in The East African.
The report said three banks have committed to be founding shareholders of Tanzania Mortgage Refinancing Company, a recently incorporated firm that will originate the mortgages. Most homeowners build their homes with either financing from high-interest, short-term loans or by setting aside a little bit out of each paycheck. A lack of a robust real estate development market, backstopped by a home loan program, means middle and lower-income borrowers are locked out. As this initiative takes off, the report adds, Tanzania’s central bank is in the process of forming a legal regulatory framework for mortgage financing.
Write to Austin Kilgore.
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