Resource Bancshares Mortgage Group Inc. and Walsh Securities mutually agreed to end their merger agreement.

The breakup follows an FBI investigation into allegations that real estate agents and mortgage brokers from whom Walsh had bought loans were involved in a land-flipping scheme. Land flipping artificially inflates property values through a series of fake sales.

On April 21 Resource Bancshares announced that it was buying Parsippany, N.J.-based Walsh for 21.4 million shares of Resource stock, worth about $320 million.

Dissolving the transaction is nothing but positive for Resource, said Garreth Plank, an analyst at UBS Securities, San Francisco. "Resource has spent too much time trying to turn a bad deal into a good one. At some point, you don't call it cider any more, you call it vinegar," he said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.