FDIC TITLE ISSUES
Introductory Comment: This Chapter is applicable only to title issues relating to real property assets (whether real property itself or instruments conveying interests in real property) of a failed bank (“Failed Institution”) for which the Federal Deposit Insurance Corporation (the “FDIC”) has been appointed as Receiver by the Georgia Department of Banking and Finance, or by any other state or federal agency having the requisite appointment power.
In most circumstances, the FDIC, in its capacity as Receiver of the Failed Institution, transfers all or a large portion of the assets of the Failed Institution to another bank (the “Assuming Institution”), which transfer is memorialized by a Purchase and Assumption Agreement (the “Purchase Agreement”). A list of Failed Institutions and a copy of the Purchase Agreement associated with each is available on the FDIC website, www.fdic.gov.
40.1 Ownership of Real Property of Failed Institution
With respect to real property owned by a Failed Institution at its time of failure that was previously acquired by the Failed Institution through the foreclosure process, all matters set forth in Chapter 17 of these standards (Foreclosures) should be considered to confirm that the Failed Institution, prior to its failure, properly took title incident to the underlying deed to secure debt and the deed under power that was executed and recorded in connection with the foreclosure sale. It should also be determined by a review of the applicable Superior Court docket whether there is any pending action for the confirmation of the foreclosure sale. If the Failed Institution properly took title to the real property in question prior to its failure, a subsequent Receiver’s Deed conveying title to the Assuming Institution should be of record, and such Receiver’s Deed should contain a recital of the date of and other circumstances surrounding the failure of the Failed Institution and the FDIC’s capacity as Receiver. With a properly executed and recorded Receiver’s Deed into the Assuming Institution, the Assuming Institution is then able to sell and convey the real property as it would any of its other real property.
40.2 Foreclosure of Deeds to Secure Debt Naming a Failed Institution as Grantee
In instances in which the Assuming Institution acquires from the FDIC (as Receiver) deeds to secure debt in which a Failed Institution is the named grantee, and on which the Assuming Institution seeks to foreclose, there should be an assignment of the subject deed to secure debt from the FDIC, in its capacity as Receiver, to the Assuming Institution, which assignment should meet all customary criteria and which should be of record in the county in which the subject property is located. The assignment may be specific to the given deed to secure debt or may be an “omnibus” form of assignment related to all deeds to secure debt held by the Failed Institution for real property in a given county. If the deed to secure debt has been properly assigned by the FDIC to the Assuming Institution, the deed to secure debt is subject to foreclosure by the Assuming Institution pursuant to its terms and pursuant to applicable law.
40.3 Transfer of Real Property by FDIC or Partner Entities
The FDIC website (www.fdic.gov) provides information with respect to structured transactions in which the FDIC has transferred real property or instruments related to real property into various private sector investors (each a “Partnership Entity”). In instances in which the Partnership Entity seeks to foreclose on a deed to secure debt, sell or transfer a deed to secure debt or other instrument related to real property, or sell or transfer real property, it should be determined that the FDIC, in its capacity as Receiver, has properly transferred the deed to secure debt, other instrument or real property to the Partnership Entity, and that such transfer document is properly recorded on the real property records of the county where the property is located. If the FDIC, in its capacity as Receiver, has not transferred the instrument or the real property into a Partnership Entity or other entity, then the FDIC should execute a transfer, assignment or other conveyance document to any third party in its capacity as Receiver for the Failed Institution.
40.4 Use of Powers of Attorney by the FDIC
It is common for the FDIC to appoint as attorneys in fact one or more individuals, often individuals who are employed by the Assuming Institution. This appointment is made through a power of attorney, which should either be recorded separately in the records of the county in which the real property is located, or a copy affixed as an exhibit to the instrument transferring title (whether a transfer and assignment of an instrument or a conveyance of real property). The examiner should consider the purpose of any document that has been executed by the attorney in fact, and should also review the power of attorney and consider any limitations or exceptions to the authority contained therein.