Mr Cooper Group Inc (COOP)

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Terminating a Receivership

Settlement with the Assuming Institution
The FDIC and the assuming institution handle most of their post-closing activities
through the “settlement” process. The settlement date may be from 180 days to 360
days after the bank or thrift closing, depending on the failed institution’s size. Adjustments
made between the institution’s closing date and the settlement date reflect (1) the
exercise of options by the acquirer, (2) any repurchase of assets needed by the receiver or
“put back” of assets to the receiver by the assuming institution, and (3) the valuation of
assets sold to the acquirer at market prices.
Management and Accounting for Receiverships
Each receivership is operated as a separate entity. During the peak years of 1990 to
1992, the FDIC actively managed nearly 1,000 receiverships and terminated on average
110 receiverships each year. In addition, at its peak in 1992, the Resolution Trust Corporation
(RTC) actively managed about 650 receiverships. Both the FDIC and the RTC
had to develop and maintain separate accounting for each of those receiverships. As a
result, the agencies developed allocation methods to distribute income and expenses
among the various receiverships.
Professional Liability Claims
The FDIC conducts an investigation into each failed institution to determine if
negligence, misrepresentation, or wrongdoing was committed. Any funds recovered
from those investigations are returned to the receivership.18
Terminating a Receivership
Receivership termination represents the final process of winding up the affairs of the
failed institution. All significant issues must be resolved before termination. The duration
of a receivership varies depending on individual circumstances, such as type of
closing; volume and quality of assets retained by the receivership; and the existence of
defensive litigation, environmentally impaired assets, employee benefit plans, and
professional liability claims.