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What is a bank failure?

A bank failure is the closing of a bank by a federal or state banking regulatory agency. Generally, a bank is closed when it is unable to meet its obligations to depositors and others. This brochure deals with the failure of "insured banks." The term "insured bank" means a bank insured by FDIC, including banks chartered by the federal government as well as most banks chartered by the state governments. An insured bank must display an official FDIC sign at each teller window.


History is always Good!

very brief history followed by some stunning graphs over the last several decades.  John Kandrac'paper on Bank Failure, Relationship Lending, and Local Economic Performance does tend to hit the proverbial 'nail on the head'when it comes to banking today.

The Image

Millions of Americans Expect to Lose Their Homes as Covid Rages


By:  Alexandre Tanzi                                                  November 23, 2020                           Bloomberg

JSO Commentary.

This is an article that one need to read between the lines.  If there are so many households facing eviction and so many others that are simply hanging on by paying something, there has to be somebody who’s not getting paid at all.  There have been so many calls for some support for landlords (both large and small) for rent assistance for lost revenue over the last eight months.  Many of the smaller landlords that do not have very deep pockets and are stuck inside the eviction moratorium have themselves run into financial difficulties.  It is good got the incoming administration potentially favors extending the moratorium, but it will only work if there is significant assistance for all the owners of these buildings.   So reading this article, keep this in the back of your mind.  

Millions of Americans expect to face eviction by the end of this year, adding to the suffering inflicted by the coronavirus pandemic raging across the U.S.

About 5.8 million adults say they are somewhat to very likely to face eviction or foreclosure in the next two months, according to a survey completed Nov. 9 by the U.S. Census Bureau. That accounts for a third of the 17.8 million adults in households that are behind on rent or mortgage payments.





The CARES Act, signed into law last March, allows homeowners to pause mortgage payments for up to a year if they experience hardship as a result of the pandemic. Borrowers who signed up at the start of the program could face foreclosure by March.

The Centers for Disease Control and Prevention’s nationwide temporary suspension on evictions -- aimed at stemming the spread of coronavirus -- is slated to end Dec. 31. The timing is far from ideal given millions of people are also set to lose their unemployment benefits at year-end without an extension from Congress.

Roughly half of households not current on their rent or mortgage payments in Arkansas, Florida and Nevada think there’s a “strong chance” of eviction by early January. This equates to more than 750,000 homes where an eviction is the biggest worry, according to the survey.

By metro area, the threat of eviction is most pressing in New York City, Houston and Atlanta.






Coronavirus, which has killed more than 256,000 Americans so far, is on track to claim another 30,000 lives by mid-December, according to forecasts from the CDC. The model shows weekly cases and deaths both rising every week for the next month, the maximum range of the agency’s projection.

President-elect Joe Biden in March expressed his support for rent freezes and eviction moratoriums due to the Covid-19 pandemic.

Commercial-Property Foreclosures Are Poised to Rise as Covid-19 Lingers

More lenders go after malls, hotels and apartment buildings as forbearance periods expire

By: Konrad Putzier                                                               Oct. 6, 2020                        The Wall Street Journal


The coronavirus pandemic came at a bad time for the Burnsville Center mall near Minneapolis. In May, Macy’s Inc. said it would close its store. J.C. Penney Co., which also has a store at the mall, filed for bankruptcy.

Owner CBL & Associates Properties Inc. risked losing the mall if it stopped making payments on the $63 million mortgage. Instead, the company overseeing CBL’s securitized mortgage agreed to defer payments for three months, according to the loan servicer’s commentary collected by data firm Trepp LLC.

But CBL didn’t pay off the loan after three months. Now, Burnsville Center is one of hundreds of properties across the country heading to foreclosure.

CBL didn’t respond to requests for comment.

Lenders, for the most part, were initially happy to grant debt forbearance and hope that the pandemic would end soon. But many now expect the pandemic and its aftereffects to linger for a long time. As forbearance periods expire, more lenders are going after properties or demanding additional capital in exchange for extending relief.

Recent, high-profile foreclosure proceedings include Chicago’s Palmer House Hilton hotel and a portfolio of luxury apartment developments in New York City. Behind the scenes, more lenders are starting negotiations to take over properties from their borrowers, said Jay Neveloff, a partner at law firm Kramer Levin Naftalis & Frankel LLP.

Across the U.S., 278 properties backing securitized mortgages were in foreclosure as of last week, according to Trepp, and at least 80 of them had financial problems related to Covid-19, the illness caused by the new coronavirus. Real-estate attorneys and executives say they expect the number of foreclosures to increase.

“It’s coming,” said Jay Olshonsky, chief executive of real-estate-services firm NAI Global. “It’s just a question of how bad is it going to be.”

                                                                                                   He expects foreclosures in commercial real estate                                                                                                            caused by the pandemic to be far worse than what                                                                                                          happened during and after the 2007-2009 recession,                                                                                                        when properties backing tens of billions of dollars in                                                                                                        commercial mortgages ended up in foreclosure.


                                                                                                    The slumping travel and restaurant industries, as well                                                                                                    as store closures, have made hotels and shopping                                                                                                            malls the most immediately vulnerable. But some                                                                                                            investors say they expect more apartment and office                                                                                                       buildings to end up in foreclosure as well.

                                                                                                   “We’ve never had a situation where people weren’t                                                                                                            paying their rent on their apartments, like we have                                                                                                          now,” Mr. Olshonsky said.

CWCapital, a so-called special servicer that oversees securitized mortgages whose borrowers are late on payments or otherwise in trouble, granted forbearance on roughly $2 billion in loans in the spring, according to the company’s president, James Shevlin.

“In the beginning we kind of thought, ‘Maybe this is a 30-day phenomenon’,” he said. He added that his plan was to “do the right thing and help people get over the hump here.”

Now CWCapital is asking borrowers to put up more capital, and if they won’t it might end up taking over the property or selling the mortgage to an investor. Mr. Shevlin estimates his company could end up taking over the keys on as many as 30% of the properties where it initially granted Covid-19-related debt relief. It has already foreclosed on a handful of properties and started proceedings on many others, he said.

“When you don’t see the liquidity on their personal financial statements, how the heck do you ever think you’re going to get paid back that money?” he said.

Still, foreclosures remain an exception. Banks, which are getting plenty of leeway from regulators, have been more willing to grant long forbearance periods and extend them if necessary. Many nonbank lenders, such as private-equity funds and commercial mortgage-backed securities lenders, are more eager to foreclose, but often lack the staff to handle all the troubled properties. Meanwhile, a number of states, including New York, have put moratoria on foreclosures.

But observers say the longer the crisis lasts, the more likely a surge in foreclosures becomes. And in states that have chosen not to block them, lenders are already taking over properties. Mr. Shevlin said all of the company’s Covid-19-related foreclosures have occurred in states where they are relatively easy, primarily in the Southeast.

At the Burnsville Center in Minnesota, CBL discussed an extension or loan modification that would have allowed it to hold on to the property even after the forbearance period ended and the mortgage came due for repayment in July, according to the special-servicer commentary.

But it would be challenging. While CBL doesn’t own the Macy’s or J.C. Penney stores, three-quarters of the mall’s tenants have a clause allowing them to close shop if one or more anchor stores shut. A former Sears store is sitting vacant after the retailer moved out in 2017. In the end, CBL declined to put up more capital, according to the commentary, and the special servicer added that the owner said it won’t resist a foreclosure.

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