Magazine article American Banker

Mortgage Woes Plague Maryland S&L

Magazine article American Banker

Mortgage Woes Plague Maryland S&L

Article excerpt

Another Maryland thrift closed last week for two days in the wake of a stunning setback for the secondary mortgage markets that came when Community Savings & Loan Association, Bethesda, and its subsidiaries began to default on huge pools of mortgages.

The thrift's subsidiaries, led by the Epic.

The thirift's subsidiaries, led by the Epic real estate syndication firm, began to miss payments on some $1.3 billion in outstanding mortgages, many pooled into mortgage securities. The holders of the securities --largely other thrift institutions such as PSFS in Philadelphia, which said it held $215 million in the mortgage securities -- threatened to begin foreclosing procedures against the Epic companies.

Community, meanwhile, closed for two days for what president Clayton McCuistion called a "cooling-off" period. Depositors began to line up in front of community branches more than a week ago when word of its Epic problems began to surface.

The thrift apparently made some $56 million in loans to Epic, whose syndication business ran into trouble because of homes whose values did not keep up with Epic's expectations.

The loans came to halt when the Federal Home Loan Bank Board told Community it must sell the Epic companies to qualify for federal deposit insurance. Community and other thrifts formerly insured by a state-sponsored private fund must get federal insurance or face liquidation, requirements that stem from the state's thrift crisis of early last May. …

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