FDIC Sells Pool of AmTrust Nonperformers for 37 Cents on the Dollar

Wed, Jul 21, 2010


By: Carrie Bay

A three-party consortium of opportunists has purchased a stake in an $898 million pool of nonperforming residential loans that the FDIC seized from AmTrust Bank when it went under last December.

The procurers – which include mortgage servicer Residential Credit Solutions, hedge fund CarVal Investors, and the Royal Bank of Scotland’s RBS Financial Products

subsidiary – picked up the AmTrust portfolio with a winning bid amounting to 37 cents on the dollar.

Ninety-six percent of the residential real estate loans in the portfolio are delinquent, according to the FDIC. More than a third of the collateral in the portfolio is located in Florida, 11 percent in California, and the rest scattered across 45 other states.

In line with the typical structure of the FDIC’s asset sales, the consortium’s investment gives it a 40 percent stake in the AmTrust portfolio. The FDIC retains a 60 percent stake and will share in the returns on the assets. The trio won out over four other bids.

As the managing member of the consortium, Texas-based Residential Credit Solutions will manage, service, and ultimately dispose of the assets. The FDIC says Residential Credit will pursue workouts for the distressed loans, applying the Home Affordable Modification Program (HAMP) protocol for those borrowers that are eligible.

According to the FDIC, this transaction completes the sale of the majority of its remaining holdings from AmTrust Bank’s collapse

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