FDIC Stake in Loans Included Atlanta Pre Foreclosure Homes- By: John Cutts
The nearly $500 million stake of the Federal Deposit Insurance Corporation in a huge mortgage loan block sold last week to North Carolina-based Roundpoint Mortgage Servicing Corporation included Atlanta pre foreclosure homes.
The FDIC stake consists of residential mortgage loans acquired from 19 failed banks in Georgia, Florida and Arizona. The loans, almost 3,400 in total, cover properties in these states. Of the 19 failed banks, seven were in Georgia, and another one, Magnet Bank of Utah, had substantial operations in Georgia.
The Georgia banks, which failed due in part to foreclosures in Atlanta and to foreclosure multi family properties, were Freedom Bank, HavenTrust Bank, Community Bank, Omni National Bank, First Georgia Community Bank, First City Bank and FirstBank Financial Services. These banks failed within the period from August 2008 to March 2009.
The FDIC stake in the loan portfolio, which consists of $490.7 million worth of residential loans, was sold for $34.4 million to Roundpoint, in addition to $137.5 million in guaranteed notes written by the FDIC as loan receiver.
According to the FDIC, nine bidders were qualified to buy the mortgage loan portfolio, which included Atlanta pre foreclosure homes, but Roundpoint presented the best offer that would result in greater returns for the loan receivers.
The loan assets will be transferred to a newly-formed limited liability corporation that will be run by Roundpoint. The FDIC would retain a 50-percent share in the earnings that Roundpoint can generate from the loans, but the percentages of both the FDIC and Roundpoint can be adjusted depending on how the loans perform.
The Roundpoint deal is not related to the plan of the FDIC to auction off whole loans from one of the failed banks, Silverton Bank. This auction, which involves $416 million worth of loans, includes stakes in the Allen Plaza and in the W Atlanta hotel.
The Freedom Bank of Georgia, which was shuttered on March 6, 2009, had $161 million in total deposits and $173 million worth of assets as of March 4, 2009. It was acquired by Northeast Georgia Bank in a loss-share contract with the FDIC.
FirstCity Bank, which was closed on March 26, 2009, had $278 million in deposits and $297 million in total assets.
Georgia has the highest number of failed banks in the nation, due largely to residential and commercial foreclosures, including Atlanta pre foreclosure homes. Just last week, two Georgia banks, Unity National Bank and McIntosh Commercial Bank, were shuttered.
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John Cutts has been educated in the finer points of the foreclosure market over 5 years.