Group schedules second meeting to address concerns about loss-share banks
by Jessica Loeding
Mar 14, 2012 | 1875 views | 0 0 comments | 15 15 recommendations | email to a friend | print
Two weeks after their first meeting, a loosely organized group of concerned business owners are planning a second gathering to address concerns over the practices of loss-share banks.

Meeting March 1, about 50 people turned out at the Clarence Brown Conference Center to talk about what steps individuals and the community can take in dealing with issues from area loss-share institutions.

According to the Federal Deposit Insurance Corporation, "Under loss share, the FDIC absorbs a portion of the loss on a specified pool of assets, which maximizes asset recoveries and minimizes FDIC losses. Loss share also reduces the FDIC's immediate cash needs, is operationally simpler and more seamless to failed bank customers and moves assets quickly into the private sector."

Those in attendance -- some with multimillion-dollar loans -- addressed what one member called a "process of aggression," such as cross defaulting, the failure of banks to accept property as payment on loans, and some loss-share banks' alleged practice of filing suit before foreclosing, thus maximizing their profit level.

For real estate investor Scott Davenport, the issue isn't with banks in general, it is with the adverse economic impact he feels is caused by certain loss-share banks.

"Everybody is affected," he said. "Think about it: You've got your tax base that is being destroyed, where that's going to raise your property taxes. OK, you've got your jobs that are being taken out of the community. You've got the investment money, capital that is being taken out of the community. And then it rolls down to everybody. It's not just the business guys that are being affected, it's everybody."

Begun in 1991, the FDIC typically will reimburse 80 percent of losses incurred by the acquiring bank on covered assets up to a predetermined amount, with the assuming bank absorbing 20 percent.

Through Dec. 31, 2011, the FDIC has entered into 281 shared-loss agreements with assuming banks who have $135.5 billion in assets under loss share. The estimated savings exceed $40.6 billion, compared to an outright cash sale of those assets, according to the FDIC.

During the March 1 meeting, Stuart Sims, attorney at Brock, Clay, Calhoun and Rogers, said Bartow County has felt the impact of shared-loss agreements more than others in the region.

"Bartow County, for whatever reason, has been harder hit than some of the other surrounding counties with these loss-share banks run amuck, and there are a couple of culprits who are worse than others," Sims said.

For many, though, a clear exit from dealings with the banks is all they hope to achieve.

"I know they are wanting to clean their books up, and I know they are wanting to get that money. I'm willing to give up the property, surrender it -- I've done paid on it for years -- and walk away and start over. I just want to be able to walk away and start over. And with them pursuing us to the point of judgments against us and forcing us into bankruptcy, does not allow us to start over," said builder Dale Boyd.

On Tuesday, organizers said the group of concerned businessmen are holding a second meeting for anyone interested in discussing options in dealing with a loss-share bank or in learning more about how the institutions affect the community.

The meeting will be Thursday, March 29, from 4 to 6 p.m. at the Clarence Brown Conference Center. For more information, contact Davenport at 770-596-0947 or email sdavenport@propropertyinv.com.