NetBank shutdown shakes up Market Street Mortgage

NetBank Inc., an online bank with $2.5-billion in assets, was shut down by the government on Friday because of an excessive level of mortgage defaults. It was the largest savings and loan failure since the tail end of the industry’s crisis more than 14 years ago.

The bank’s seizure will mean new owners for Clearwater-based Market Street Mortgage, an independent subsidiary of NetBank. “We’re negotiating with a potential buyer (of Market Street) right now,” FDIC spokesman Rickey McCullough told the Times Friday night. He said the FDIC hopes to sell the company as a whole, including all the fixed assets and loan production offices, rather than breaking it apart.

Founded in 1986, Market Street made $3.2-billion in loans last year. It currently has 590 employees in 16 states, McCullough said. He said the Clearwater company did not make the subprime loans that are being blamed in part for NetBank’s downfall.

-Times Staff Writer Helen Huntley