Combining these questionable lending methods with low down-payment requirements and declining home prices led to 91% of BankUnited's $7.4 billion in option-ARMs to have negative amortization of $354 million as of June 30. That's the most recent information we have on BankUnited's option-ARM portfolio, since the second quarter is the most recent for which the holding company managed to file a 10-Q report with the SEC, and the OTS, which is the regulatory agency that allowed several large thrifts to implode from these toxic loans, doesn't require thrifts to break-out option-ARMS on the Thrift Financial Report.
Under a previous OTS order, BankUnited submitted a capital plan to the regulator on Feb. 25. On April 10, the OTS notified BankUnited of its intent to file the April 14 prompt corrective action order, and rejected the thrift's capital plan.
The first part of the order requires BankUnited to be "recapitalized by (a) merging with or being acquired by another financial institution, financial holding company, or other entity, or (b) the sale of all or substantially all of the Institution's assets and liabilities to another financial institution, financial institution holding company, or other entity, within twenty (20) days."The second part of the order requires the institution to achieve and maintain Tier 1 leverage and total-risk-based capital ratios of 4% and 8% within 20 days. Of course, the requirement to sell the institutions or most of its assets within the same timeframe renders the capital ratio requirements moot.