Now that the American Land Title Association ("ALTA") has withdrawn the ALTA Form 21-06 Creditor's Rights Endorsement, what steps can a lender take to protect itself?
To recap, the Creditors' Rights Endorsement provided protection against loss or damage sustained by the lender in the event that the lender's mortgage was set aside due to a fraudulent conveyance or preference under the U.S. Bankruptcy Code, state insolvency statutes or other creditor's rights laws.
On Friday, the Office of Thrift Supervision closed Mainstreet Savings Bank, FSB, headquartered in Hastings Michigan, and appointed the FDIC [http://www.fdic.gov/bank/individual/failed/mainstsvgs.html] as receiver for the bank.
On Friday, the Florida Office of Financial regulation closed Metro Bank of Dade County, headquartered in Miami, Florida, and Turnberry Bank, headquartered in Aventura, Florida, and the OCC closed
In a significant development for financial institution directors and officers, the Federal Deposition Insurance Corporation (FDIC) has filed the first lawsuit in the current financial crisis against former officers of a closed financial institution arising from alleged loan losses to the bank. On July 2, 2010, the FDIC filed a complaint in federal court in California against former officers of the homebuilding division of IndyMac Bank for civil money damages. FDIC v. Van Dellen, Case No. 2:10-cv-04915-DSF-SH (C.D. Cal.) (July 2, 2010).
Bankruptcy-related developments during the first half of this year have sent shock waves
through the secured lending, derivative, and distressed debt trading communities. Several
notable decisions may significantly affect the way these entities operate and calculate risk,
and result in changes to standard documentation. Until recently, a proposed overhaul of
Bankruptcy Rule 2019 threatened to discourage distressed debt investors, including hedge
funds, from participating in bankruptcy proceedings as part of an ad hoc committee or group.
On Friday, the Florida Office of Financial Regulation closed Sterling Bank, headquartered in Lantana, Florida, and appointed the FDIC as receiver for the bank. As receiver, the FDIC entered into a purchase and assumption agreement with IBERIABANK, headquartered in Lafayette, Louisiana, to assume all of the deposits of Sterling Bank.
On Friday, the Oregon Department of Consumer and Business Services closed Home Valley Bank, headquartered in Cave Junction, Oregon, and appointed the FDIC as receiver for the bank.
Yesterday, Treasury released its most recent transactions report for the period ending July 20, 2010. The report shows the completed exchange of Treasury's $400 million of preferred stock in First BanCorp for $424,174,000 of mandatorily convertible preferred stock (MCP), which is equivalent to the initial investment amount of $400 million plus $24,174,000 of capitalized previously accrued and unpaid dividends.