Parent Company of Reverse Mortgage Lender Hit With C&D From Regulators

image First Mariner Bancorp, the parent company of First Mariner bank disclosed in a SEC filing on Monday that it had entered into an agreement with banking regulators requiring it to boost capital levels, improve earnings and reduce problem loans. 

In a statement issued Monday, First Mariner said its management and board of directors had already taken action to address the FDIC’s concerns, even before entering into the cease and desist order Friday.

“[First] Mariner is working in complete cooperation with regulators and expects to satisfy all of the requirements of the order,” the bank said in a statement. “The bank continues to pursue plans to increase its capitalization through a combination of capital-raising efforts, which include conventional efforts in public and private markets as well as the sale of assets.”

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Next Generation Financial Services (NGFS), a leading reverse mortgage lender is a division of First Mariner Bank.  The company has endorsed 550 HECM YTD according to data from Reverse Market Insight.

According to people I spoke with at  NGFS, it’s business as usual for the company. 

Update: Thursday afternoon, NGFS President Brett Carter sent an email to employees regarding the C&D which stated:

As many of you know, earlier this week First Mariner Bank (the "Bank")
announced that it had agreed with the Federal Deposit Insurance Corporation (the "FDIC") to the entry of an FDIC Cease and Desist order, dated September 18, 2009 (the "Order").  Pursuant to the Order, the Bank is required, among other things, to repair the Bank’s capital position, improve earnings and reduce the Bank’s exposure to nonperforming loans.  The Bank has deadlines to achieve improvement in its capital position and loan portfolio, the
earliest of which is March 31, 2010.

We at NGFS take this development seriously, and we intend to monitor the Bank’s progress in complying with the Order.  As necessary, we will take action to ensure that the Bank’s situation does not negatively affect NGFS.

Finally, issuance of the Order does not affect our near term or long term plans for NGFS.  We will continue to aggressively grow our distribution capacity.

Best regards.

Brett Carter

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  • Statements such as the foregoing should become more commonplace in the SEC filings by banks generally. While there is always room for concern in light of this statement, knowing what their auditors' report says would be helpful. If the auditors' report identifies the entity as in jeopardy of no longer being a “going concern,” then there should be unease. In between the announcement above and the next auditors’ report, the financial quality of information and conclusions about this company will be dependent upon what the company says about itself and how well independent financial analysts are able to diagnose how well ongoing operations are meeting the objectives as stated. At times neither is all that objective or reliable.

  • You all should know that a Cease and Desist order is not lightly given. First Mariner likely is in deep trouble.

    Veale — SEC regulation has nothing to do with this. It's a FDIC order that can be given to any private or public insured bank. When will Security One be able to pay its bills?

    • Are you implying that First Mariner management is incapable of meeting or has no intention of meeting the terms or deadlines in the agreement? Per management the first deadline is March 31, 2010 and it intends on complying and has the ability to comply with the agreement. I have no reason to discount or doubt those claims, do you?

      Without SEC filings, how is it that you propose that the PROGRESS on compliance be followed by those of us with little or no verifiable “inside” information? It is what RMD references in the article. How are you getting your information to reach your conclusion about the likelihood of deep trouble?

      Auditors are required to disclose if they believe First Mariner cannot reasonably meet or do not intend on meeting the deadlines if in their determination it could materially impact First Mariner. To some of us the opinion of auditors has much higher credibility than the mere speculation of one who uses a name other than his/her own and bases the likelihood of deep trouble solely on some undisclosed (and apparently very subjective) criteria.

      No one doubts a FDIC C & D order is anything other than serious. However, if the FDIC is agreeing to deadlines starting more than six months from now, it is hardly of the nature that shutdown is imminent. Somehow FDIC is satisfied that the agreement meets its standards for delaying more punitive actions.

      On to your direct accusation — who or what “Security One” is, I have no idea. If you are referring to Security One Lending, Inc. headquartered in San Diego, CA, our CFO has confirmed your generalization is groundless; our auditors would have disclosed that. ReverseDisclosure made the same accusation last Wednesday in a comment to a 9/22/2009 RMD article titled “Reverse Mortgage Lenders Get Creative to Fund Ginnie Mae HMBS”. I challenged ReverseDisclosure to take appropriate action with no response. Are you also ReverseDisclosure?

      I extend the challenge to you. If your claim has substance, please call our San Diego office at (866) 480-4715 and ask for the CFO or ask the receptionist to leave me a message; however, we do not pay fraudulent or frivolous claims or the claims of unrelated parties. We take your accusation very seriously and will respond.

  • whart,rnrnAre you implying that First Mariner management is incapable of meeting or has no intention of meeting the terms or deadlines in the agreement? Per management the first deadline is March 31, 2010 and it intends on complying and believes it has the ability to comply with the agreement. Do you have any verifiable reason to discount or doubt those claims?rnrnWithout SEC filings, how is it that you propose that the PROGRESS on compliance be followed by those of us with little or no verifiable u201cinsideu201d information? It is what RMD references in the article. How are you getting your information to reach your conclusion about the likelihood of deep trouble? rnrnAuditors are required to disclose if they believe First Mariner cannot reasonably meet or do not intend on meeting the deadlines if in their determination it could materially impact First Mariner. To some of us the opinion of auditors has much higher credibility than the mere speculation of one who uses a name other than his/her own and bases the likelihood of deep trouble solely on some undisclosed (and apparently very subjective) criteria. rnrnNo one doubts a FDIC C & D order is anything other than serious. However, if the FDIC is agreeing to deadlines starting more than six months from now, it is hardly of the nature that shutdown is imminent. Somehow FDIC is satisfied that the agreement meets its standards for delaying more punitive actions. rnrnOn to your direct accusation — who or what u201cSecurity Oneu201d is, I have no idea. If you are referring to Security One Lending, Inc. headquartered in San Diego, CA, our CFO has confirmed your generalization is groundless; our auditors would have disclosed that. ReverseDisclosure made the same accusation last Wednesday in a comment to a 9/22/2009 RMD article titled u201cReverse Mortgage Lenders Get Creative to Fund Ginnie Mae HMBSu201d. I challenged ReverseDisclosure to take appropriate action with no response. Are you also ReverseDisclosure?rnrnI extend the challenge to you. If your claim has substance, please call our San Diego office at (866) 480-4715 and ask for the CFO or ask the receptionist to leave me a message; however, we do not pay fraudulent or frivolous claims or the liabilities of unrelated parties. We take your accusation very seriously and will respond. rn

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