Regulators could seize troubled Newport Beach-based mortgage lender Downey Financial Corp. before the end of the year if the company fails to raise more capital, according to Security and Exchange Commission filings released this week.
The company was ordered in September by its main regulator, the Office of Thrift Supervision, to raise more capital.
“In the current economic environment, there is a significant risk that the bank will not be able to raise sufficient additional capital to ensure compliance with the capital requirements of the bank consent order by year-end,” an SEC filings released late Monday stated.
Shares in Downey were down 99 cents, or 68.28% to 46 cents when the markets closed Tuesday.
Downey reported a third-quarter loss of more than $81 million in October. The company announced last month that it would shut down its Newport Beach-based wholesale loan department and cut about 200 positions companywide. The department accounted for about 80% of Downey’s loan production.
