THE
NATIONAL MARKET TODAY
Bank foreclosures appear to be slowing down. According to the Federal
Deposit Insurance Corp. (FDIC), there were 26 bank failures during the
first quarter 2011 with assets totaling $10 billion dollars. This was
the lowest count since the second quarter 2009. Further, the month of
March saw only three failed banks making March the slowest monthly
pace since December of 2008. However troubled banks were and remain
extremely exposed to real estate loans. Depending on which way real
estate market trends, bank failure rate will be directly pegged to
real estate value.
Trepp’s Foresight Analytics details a bank Watch List containing 173
distressed banks. According to the Watch List, while the pace of bank
closures has slowed, the banks are spending more time on the list.
The slower pace of the foreclosures will allow banks time to shore up
their balance sheets and begin to absorb losses. This will most likely
signal an end to “extend and pretend” practice that lenders have
utilized during the last few years. More and more banks will need to
address the distressed real estate loans head on.
