NORTH PROVIDENCE – Federal regulators have lifted a cease and desist order against Union Federal Savings Bank that had prevented it from originating student loans since July 2009.
Union Federal’s parent, First Marblehead Corp., said last week that it still was considering “strategic alternatives,” including selling the distressed North Providence-based lender.
The U.S. Office of Thrift Supervision forced Union Federal to stop making loans in July so it could reduce its exposure to losses from private student loans.
In a regulatory filing last year, First Marblehead explained that Union Federal has been unable to package and sell the student loans it originated to investors since September 2007 “due to severe and continuing disruption in the securitization markets.”
Since the OTS order, Union Federal has sold all the students loans on its books at discount prices. The biggest chunk of risky loans – $234 million worth – was sold for about half their value to Wells Fargo & Co. in October.
The First Marblehead Corp. (NYSE: FMD) is a provider of outsourcing services for private, non-governmental, education lending. Union Federal Savings Bank – a First Marblehead subsidiary – is a one-branch community bank in North Providence. For more information, visit www.FirstMarblehead.com or www.UnionFSB.com.
