By Robert Little and Andrea K. Walker , robert.little@baltsun.com and andrea.walker@baltsun.com|February 22, 2009
Getting a mortgage from Suburban Federal Savings Bank couldn't have been much easier for Samuel Burrow Jr.
A Baltimore mortgage broker introduced him to Suburban in April 2005, when he was looking for $1.3 million to refinance and finish construction of a home in Ellicott City. His loan application listed his occupation as minister and his income at about $30,000 a month. The bank didn't ask him to prove he could make the $9,100 monthly payment, just to sign a paper stating he could. Two months later, Burrow scrawled his name on some documents at a Timonium title company and got his money.
But Burrow never made a payment, according to court records, and then filed for bankruptcy. Late last year, he sued Suburban, claiming his income was just $4,700 a month and that the bank lured him into a loan he couldn't afford. He and Suburban's lawyers are still arguing in court over who misled whom.
FOR THE RECORD
An article Sunday about the collapse of Suburban Federal Savings Bank erroneously included a photo on News page 12 of an Ellicott City home that had no involvement with the failed bank.
THE BALTIMORE SUN REGRETS THE ERROR
Started in 1955 and run until the end by its founding family, Suburban once represented the idyllic image of a small-town thrift, taking deposits and lending conservatively to people and communities it knew. But regulators say its decision, sometime around 2005, to start lending freely to new customers with few or no questions asked propelled it into a precipitous implosion of bad debts that ended with its seizure by federal regulators on Jan. 30. It was Maryland's first bank failure in 17 years.
After federal agents took over Crofton-based Suburban, they found that 72 percent of its mortgage loans had been made with "less than full" documentation.
Suburban's story, regulators said, is that of a classic bank failure, one that embodies the wave of reckless lending and unchecked ambition that has shattered banks across the country.
"I don't know the motivation, and I don't know the people involved. But every year they could have changed, and they chose not to," said Timothy T. Ward, deputy director of the federal Office of Thrift Supervision.
"It's just an age-old adage that when times are tough you have to return to fundamentals - which in banking means making sure the borrower has the ability to pay. They didn't do that."
Documents on file with Ward's agency attribute Suburban's collapse to "the failure of the Board of Directors and managers to oversee an aggressive lending program." None of the bank's executives or directors, including President Robert L. Morrison Jr., would talk about the institution's demise.
