Loans for sale

A New York Times report about former Countrywide Financial Corp. executives profiting from the Federal Deposit Insurance Corp.'s liquidation of distressed home loans led BailoutSleuth to wonder what else the agency was selling and how it was screening buyers.

 

We found that the FDIC has outsourced the job, turning to several  private companies to auction off the assets left behind by 25 bank failures last year and 16 so far this year.

 

This week, the FDIC is auctioning off $485 million in performing and non-performing loans originated by Silver State Bank in Henderson, Nev., which was closed by regulators on Sept. 5. Bids for that pool of loans were due Tuesday.

 

First Financial Network Inc., of Oklahoma City, Okla., is overseeing the auction, along with at least one other loan sale on the FDIC's calendar. The Debt Exchange Inc., a Boston company that does business as DebtX, is handling the sale of $532 million in loans for the FDIC later this month. Those assets -- which represent the remains of five different banks -- include everything from real estate loans to consumer loans and commercial and industrial loans.

 

Keefe Bruyette & Woods Inc., a New York investment firm, handled the recent sale of $1.45 billion in residential and commercial loans from the failed First National Bank of Nevada, in Reno, and an affiliate, First Heritage Bank of Newport Beach, Calif.

 

BailoutSleuth has been hearing some interesting things about that auction, in which a Minnesota bank got $730 in residential real estate loans and an obscure Salt Lake City company got more than $700 million in commercial real estate loans. We will report more details on that sale as we confirm what we've been told.

 

The New York Times reported this week that Private National Mortgage Acceptance Company LLC (PennyMac), run by former Countrywide President Stanford L. Kurland, has been snapping up loans from struggling or failed financial institutions.

 

In one deal, the Times reported, PennyMac bought control of roughly $560 million in largely delinquent home loans for $43.2 million. Those loans were originated by First National Bank of Nevada, which was seized by regulators in July. First National Bank's portfolio was marketed for the FDIC by Stifel, Nicolaus & Co. of St. Louis.

 

PennyMac is backed by two hedge fund operators, BlackRock Inc. of New York and Highfields Capital Management LP of Boston.

 

The New York Times reported that more than a dozen former Countrywide executives are working at PennyMac, which has headquarters in Calabasas, Calif. Countrywide has been widely blamed for helping touch off the nation's current economic crisis, by making loans to legions of risky borrowers who either defaulted on their mortgages or are in danger of doing so. 

 

Countrywide's activities are the subject of investigations by the Securities and Exchange Commission and the Justice Department, Neither probe has produced charges against the company or its executives. Bank of America Corp. bought Countrywide last year.

 

published March 5, 2009, 0 Comments

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Chris Carey, Editor
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This page contains a single entry by Chris Carey published on March 5, 2009 12:25 PM.

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