The Federal Deposit Insurance Corp. (FDIC) closed on two offerings of structured notes for $2bn. The notes are backed by performing and non-performing mortgages, real estate owned (REO) assets and construction loans. The timely payment of the notes is guaranteed by the FDIC and backed by the full faith and credit of the United States. The assets were seized from failed Chicago-based Corus Bank and Houston-based Franklin Bank. The FDIC, acting as receiver of both banks, conducted the sale of the notes through private offerings and has kept details tightly under wraps. FDIC said the $1.38bn of Corus notes are backed by performing and non-performing construction loans and REO assets with an aggregate unpaid balance of $4.5bn. The notes were originally issued in October 2009 to the Corus Bank receivership in connection with a limited liability company (LLC) formed to hold the related assets. The FDIC retains its 60% equity interest in the LLC, and ST Residential -- an entity formed by a consortium of investors led by Starwood Capital Group -- still owns its 40% equity interest purchased in October 2009. The sale of the Corus notes includes three classes of notes with maturities of 1.5, 2.5 and 3.5 years from the closing date. Rather than accruing interest or making payment prior to maturity, the notes are sold at a discount to their principal balance and allow investors to earn the difference between the sale price and the principal balance paid at maturity, FDIC said in a statement. The $653m of Franklin notes are backed by performing and non-performing mortgages and REO assets with an aggregate unpaid balance of $1.22bn. The notes were originally issued in September 2009 to the Franklin Bank receivership in connection with the LLC created to hold the assets in the pilot funding mechanism of the Legacy Loans Program. The FDIC still retains its 50% equity interest issued by the LLC, while the RCS Franklin Venture still owns the 50% equity interest bought in September 2009. The $1.31bn of proceeds generated from the sale of the Corus notes will go to the Corus Bank receivership, while the $652m of proceeds from the sale of the Franklin notes will go to the Franklin Bank receivership, FDIC said. This will help recover "substantial funds" paid out from the FDIC's Deposit Insurance Fund (DIF) to take over the banks. Write to Diana Golobay.