Home Equity
Debt Consolidation
Home Purchase
Fast Mortgage - Mortgage News

Cross Country Bank Agrees to Modify Certain Business Practices

Refinance & Save!
Lower Your Mortgage Payments.

Home Equity Loans
Take advantage of your equity.
Fast & Easy.

Consolidate Your Debt
Pay Off Bills
& Lower Your Payments

Want to Purchase a Home?
Get Approved Now!
July 1, 2002

Cross Country Bank (CCB), a Delaware State Chartered bank, has been a leading lender in the subprime market since 1996. The Bank's capital and loan loss reserves equaled 42.6% of owned loans as of December 31, 2001, which was one of the highest ratios in the industry. However, recent failures and financial troubles of banks engaged in subprime lending have prompted the Federal Deposit Insurance Corporation (FDIC) and other regulators of financial institutions to place increased scrutiny on subprime lenders. The regulators are mandating changes in control procedures and business practices as preemptive measures to avoid future losses to the insurance fund. The ultimate objective is to ensure that only those institutions with well-capitalized and sound operations continue lending in the underserved markets.

In this regard, effective May 15, 2002, Cross Country Bank and the FDIC entered into a Consent Agreement whereby the Bank will enhance certain of its business practices. Foremost are establishing additional reserves for loan losses covering up to one year and providing additional capital for unanticipated loan losses through different risk weighting of the Bank's loan portfolio. In meeting the new guidelines, CCB's capital and loan reserves will then exceed 65% of owned loans ensuring that the Bank remains one of the best-capitalized banks in the industry. In order to ensure the FDIC that the Bank can operate as a "well-capitalized" institution under the new stricter standards, a revised capital plan has been submitted to the FDIC. The Bank also agreed to modify certain aspects of its lending policy to impose tighter underwriting standards. Given that the Bank is privately owned, other items in the Agreement will have no discernable effect on the Bank's operations.

As previously noted, a number of banking institutions have experienced significant financial troubles in administering subprime lending programs. While some banks have failed, others are exiting the business due to their inability to meet the more restrictive operating and capital standards.

Cross Country Bank's Chairman, Rocco A. Abessinio, noted that "the regulatory actions to curb the high-risk lending activities of troubled subprime institutions are necessary and appropriate in order to maintain public confidence in the banking system." Abessinio added that, "Cross Country Bank's strong financial position and talented workforce, combined with the technology based operations of its affiliate, Applied Card Systems, will enable it to meet the new stricter capital requirements and continue to deliver products and services tailored to meet the growing needs of underserved consumers."

Although the new standards will change the Bank's existing cost structure, no changes are planned in its risk-based pricing structure at this time.

COPYRIGHT 2002 Business Wire, Gale Group

What are people saying about mortgages today:

Rates on 30-year mortgages edged down last week to a seven-month low. Mortgage-giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages fell to 6.3 percent, down slightly from 6.31 percent two weeks ago. It put rates at the lowest level since they were at 6.24 percent the first week of March.

Bank of Hawaii, Central Pacific Bank, Territorial Savings Bank and Wells Fargo Home Mortgages all cut their 30-year mortgage rates to 5.75 percent this week.

Most people think of a mortgage as a means to an end. After all, you buy a house, not a home loan. But a mortgage is much more than the path to homeownership. It is a financial instrument that must be managed, just like any other financial investment.