Second Federal Savings & Loan ordered to reduce level of delinquent loans
A pioneer in the market for home loans to illegal immigrants.
By Becky Yerak

Second Federal Savings & Loan Association of Chicago, a pioneer in the market for home loans to illegal immigrants, has been ordered by a U.S. regulator to reduce its level of delinquent loans, develop a plan to maintain capital, and improve its liquidity, among other things.

The $265 million-asset thrift, which has two branches in Chicago and one in Cicero, was hit March 23 with a cease-and-desist order from the federal Office of Thrift Supervision.

It's working to address the shortcomings cited in the order, the bank said.

"We're no more insulated from this mess in the real estate market than most other real estate lenders," Second Chief Executive Mark Doyle said Monday. "And more than that, out borrowers tend to be low-to-moderate income borrowers who are harder hit."



Rising unemployment rates have hurt Second borrowers, he said.

The institution lost $1.2 million in the fourth quarter. In the same period a year ago it lost $167,000. Its loan delinquency rate over the period has risen from 0.93 percent to 5.2 percent.

Second was among the first in the nation to allow mortgage applicants to use a taxpayer identification number provided by the Internal Revenue Service when they were unable to get a Social Security number.

But the bank said delinquency rates on loans to illegal immigrants are about the same as those to its other borrowers.

Actions that the bank must take include: adopting a "liquidity contingency plan" that involves periodic liquidity stress testing to simulate various market conditions; setting up a written plan for the reduction and collection of delinquent loans; and hiring an independent information security consultant with the goal of improving information technology policies and procedures.

Second, which is privately held, recently received an "outstanding" Community Reinvestment Act rating. CRA ratings reflect how well an institution is serving low- and moderate-income neighborhoods.

"Second Federal has served the financial needs of our local communities for the past 125 years," the thrift said on its Web site. "We've been around a long time and will be able to sustain these challenges," Doyle told the Tribune.

"We have a very strong capital base," he said, noting the bank "will continue to be well within minimum capital levels."

byerak@tribune.com

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