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First Federal - Wholesale - Wholesale residential

2009-01-26

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stories: reuters.com, labusinessjournal.com, latimes.com, businesswire.com, marketwatch.com

Update - 2010-01-07: FirstFed Financial Corp., the former holding company of First Federal Bank of California, has filed for bankruptcy. Reuters reported the move comes "less than a month after its banking unit was shut down by federal regulators." From the LA Business Journal:

"The Federal Deposit Insurance Corp. on Dec. 18 announced that First Federal's 39 branches and their deposits were being acquired by OneWest Bank FSB, the Pasadena bank created from the assets of failed IndyMac Bancorp. First Federal had about $6.1 billion in assets and $4.5 billion in deposits as of Sept. 30."

The failure of First Federal Bank of California will cost the FDIC's deposit insurance fund an estimated $146.3 million.

Update - 2009-01-27: A Cease & Desist order from the Office of Thrift Supervision (OTS) was issued to First Federal Bank of California on 2009-01-26 citing the bank for engaging in "unsafe or unsound practices, which have resulted in inadequate asset quality, earnings, liquidity planning and capital levels." Under the order, First Fed must submit a "Capital Plan" to OTS within 15 days to address how it will remain "well-capitalized" and develop a "Classified Asset Reduction Plan" to reduce certain "classified assets" to 35% or less of its combined Tier 1 Capital and Allowance for Loan and Lease Losses, among other requirements.

The L.A. Times reported 62 jobs were cut. A press release by the bank noted the workforce reduction affected "single family lending and commercial lending operations as well as some reduction in support areas of the Bank." First Federal Bank of CA specialized in Option ARMs but had recently "been reshaping itself into a more traditional lender" as per the L.A. Times article:

"FirstFed began tightening its lending requirements in late 2005, before its rivals did so, improving its odds of survival, analysts said. Nonetheless, its ratio of nonperforming assets -- a measure of bad loans -- stood at 7.9% on Sept. 30, up from 1.4% a year earlier."

Average volume in 2007 topped $84 million per month. The Los Angeles based bank had over $6.5 billion in its loan portfolio as of September 30, 2008.

Original Listing - 2009-01-26: Details are still being compiled, but First Federal Bank of California's wholesale residential operations have been shut down today. Per the FirstFed wholesale website comes this announcement:

First Fed has closed its Wholesale Residential Lending Division effective today, January 26, 2009.

Files received today, January 26, 2009, will be returned un-processed. Files that have not been previously approved (in suspense) as of January 26, 2009 will be declined.

All files that are approved and in the funding process must be funded by February 27, 2009, and only files that satisfy all of the Bank's conditions by such date will be funded. Any fees previously collected on a file that has not been approved will be returned within 30 days. If you have any questions regarding the above, please contact 1-800-800-490-4761.

If you have a file in process with the Bank, please contact Michelle Bartolo at 310-302-5791.

And Marketwatch has the following release on the closure:

FirstFed Financial Corp. (the "Company") announced today a reduction in the staff of its wholly-owned banking subsidiary, First Federal Bank of California, FSB (the "Bank"), by 62 persons, or approximately 10% of the Bank's current workforce. The reductions will come primarily from the Bank's single family lending and commercial lending operations as well as some reduction in support areas of the Bank. The Company currently expects this workforce reduction to result in estimated annualized compensation cost savings of approximately $4.2 million.

Stay tuned as we put together further details on this listing!


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Comments:

ezqrich at 02:12 2009-01-31 said:
Here's what killed First Fed: [list:07ba73ceed]Paranoia - they accused everybody of 3rd party origination; a broker was in the same 5 story commercial building as us, and because we had the same address (but not suite #) they automatcally assumed we were conspiring.

Unreasonable conditions - they accused a borrower of harboring people in the garage even though the appraisal did not show any such thing; in fact the borrower had not opened the garage for 20 years and the appraiser had to help unstick it when he had to go back out there for no reason.

The also CALLED the borrowers to make sure they lived in the house, if a cousin renting a room answered, they considered it non-owner occupied. They also checked and rechecked each signature and sent rebate disclosures to escrw for comparison purposes.

Greed - they started charging $250 just to apply to be an approved broker

More Paranoia - they had a database of originators that were 'bad' or prior attached to a 'bad' office. If you hired someone you had to get their approval first (seriously there was a hard letter in the mail) before hiring an originator.

Good riddance to Mccarthyism. Good luck J from the QC department maybe there's work as a detective somewhere! [/list:u:07ba73ceed] Permalink

LillianWalker at 23:07 2009-07-13 said:
I was in the midst of negotiating a short sale for one of my listings and First Federal just threw a tangent in the negotiations this past Thursday. The Trustee Sale date was set for Monday July 13th and on the heels of them giving us an updated short sale approval (because they drug their feet so long the first time we were in escrow we lost the first buyer and they lost 80k) so now here we are with a buyer and a back up, get this they asked for a NON REFUNDABLE DEPOSIT from the buyer in order to postpone the Trustee Sale and give us the revised short sale approval! AND they wanted the buyer to wire the funds to them directly instead of escrow! Like any buyer would ever do that! What makes them think that a buyer would trust them to keep track of their money and not have the protection of escrow! CRAZY! Needless to say both buyers told them to go pound sand. This property has over 1.2 million in loans against it, the first $941k and the second $159k..... We put this home on the market in Dec got an offer the second week in January, lost that buyer in March, got a new one in April and we have seen the price and comparables go from 840k to 678k Amazing. If I were a stock holder I would be livid! How does that mitigate losses? Oh did I mention we got our attorney involved... but they are so unreasonable it did not help. Something has got to change... Permalink

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Important: This company is on our list of lending operations that have "imploded". However, please note that "imploded" is a somewhat subjective and does not necessarily mean operations are ceased permanently: it can mean bankruptcy filing, temporary but open-ended halting of major operations, or "firesale" acquisition. All information here is provisional, and may contain inaccuracies (especially newer information). If you are planning on doing business with this company or any other one listed on this site, you should inquire with them directly on whether they can still meet your needs. Many are still operating in some capacity.