Pricing exceptions are widespread in mortgage — and so are the regulatory risks

Read Now

Bankrupt AmeriFirst Financial wants court to green light private sale of loans  

AmeriFirst plans to pay warehouse lenders and fund restructuring costs by selling retail and commercial loans to Oaktree

Bankrupt retail lender AmeriFirst Financial is seeking approval for a private sale of loans from a Delaware bankruptcy judge to pay off two warehouse lenders and fund restructuring costs.

If approved, AmeriFirst’s retail and commercial loans worth more than $5 million will be sold to a non-QM lender Oaktree Funding Corp., Inc., according to a motion filed by AmeriFirst and holding company Phoenix 1040 LLC earlier this month. 

Law360 and National Mortgage News first reported on AmeriFirst’s motion seeking approval of loan sales.

The funds will be to be used to pay Centier Bank and Sound Capital — which AmeriFirst used to fund the mortgages it originated.

Oaktree would pay the payoff value of the retail loans worth $4.9 million to Centier Bank. Centier, in return, would release $1.4 million of cash collateral to AmeriFirst.

With the sale, Oaktree would pay $293,000 of two closed and partially drawn commercial loans to Sound Capital to retire AmeriFirst’s obligations to Sound Capital under its warehouse line.

AmeriFirst’s sale of loans will not only pay off its secured obligations to Centier Bank and Sound Capital under their warehouse lines but also resolve disputes with Oaktree, court documents showed.

While AmeriFirst claimed that Oaktree is obligated to pay the lender $425,582 under a previous agreement with Oaktree, the non-QM lender said that the amount should be offset against money owed by AmeriFirst. 

With the judge’s approval for a loan sale, Oaktree would apply $425,582 “to satisfy the unpaid 2.43% of the funded amount of the buyer loans,” according to the motion. 

Oaktree, AmeriFirst and its legal counsel didn’t respond to requests for comment. 

With the approval from the court, the transaction is expected to close within 10 days of the court approving the sale. A hearing on this motion is scheduled on October 26. 

AmeriFirst’s request for approval to sell its loans comes less than two months after it filed for Chapter 11 bankruptcy protection in late August. 

The lender had listed both estimated assets and liabilities as much as $100 million. 

Against the backdrop of rising interest rates, AmeriFirst ceased forward mortgage origination while maintaining its servicing portfolio in December 2022.

Eric Bowlby, former CEO of AmeriFirst Financial, had told HousingWire it relaunched its forward mortgage origination business in June. Getting rid of regional and branch margins, the lender would offer competitive rates to buyers, Bowlby said in an interview

Bowlby was removed as CEO when the lender filed for bankruptcy while a holding company Phoenix 1040 LLC was added as a shareholder.

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular Articles

3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please