Mortgage Related Failures Eased Last Year

January 12, 2009 No Comments »

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While the mortgage crisis has certainly shown no clear sign of letting up, mortgage-related closures eased from 2007 levels.

MortgageDaily.com, which tracks closures that generally involve companies with at least 50 employees, said 116 mortgage bankers and other financial institutions failed last year.

While still a historically sizable amount, those numbers are down from the 160 closures in 2007, when the crisis first took hold.

However, 2007 was riddled with non-bank lender failures, such as the mortgage wholesalers, while 2008 saw a steep rise in FDIC-insured failures and some of the most notable in history.

Last year, juggernauts like Fannie Mae, Freddie Mac, and Washington Mutual all failed, institutions many deemed “too big to fail.”

Other notables that closed shop during the year included Indymac and Newport Beach-based mortgage lender Downey Savings and Loan, which was taken under by the now infamous option arm.

Another large bank hit by option arms was Wachovia, which likely would have failed if not for takeover bids from fellow banks Citi and Wells Fargo.

During 2008, 77 non-bank lenders shut down, 25 FDIC-insured institutions failed, and 14 credit unions shut their doors.

A year earlier, only 3 FDIC-insured banks and seven credit unions failed, suggesting a more systematic collapse in 2008.

These numbers, while informative, skip over the numerous mom-and-pop shops out there that have been forced shut, along with the many associated industries affected.

Take a look at my list of all mortgage-related closures, mergers, and layoffs.

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