Milestone Offers $20bn Servicing Rights Portfolio
Investment bank Milestone Merchant Partners is officially offering a mortgage servicing portfolio on behalf of the Federal Deposit Insurance Corp. (FDIC). The offering of Fannie Mae (FNM) and Freddie Mac (FRE) servicing rights involves $23bn of underlying mortgage balance originated by failed AmTrust Bank. Milestone last week commenced the marketing of the sale. FDIC previously tapped Milestone Merchant Partners to handle the sale of the $20bn mortgage servicing portfolio that once belonged to AmTrust. The FDIC in January said it hoped to sell the rights to an AmTrust mortgage-servicing portfolio of nearly 100,000 loans by Q2 of 2010. A source familiar with the portfolio told HousingWire the servicing rights are considered high-quality, and will likely attract interest from bank and non-bank institutions. "This is an unusual opportunity, because unlike other FDIC asset trades of generally more distressed assets -- usually the reason the bank failed -- these are pristine servicing assets associated with one of the more profitable, high-quality business units at the bank," said the source, who spoke on condition of anonymity because a sales transaction is not final. "Here's an opportunity to take a really high-quality, recent production portfolio to counter-balance some of the other more delinquent servicing that may be on the balance sheets right now." The Office of Thrift Supervision (OTS) closed Cleveland, Ohio-based AmTrust Bank on Dec. 4. The FDIC, as receiver, entered into a purchase and assumption agreement with Westbury, New York-based New York Community Bank (NYCB), which took responsibility for servicing the loans for up to a year while the FDIC finds a buyer for the servicing rights. The offering of the servicing rights comes amid industry reports that the FDIC is readying the sale of $3bn of loans seized from AmTrust. Barclays Capital is looking to sell $2bn of loans, while Stifel Nicolaus & Co. will accept bids for $1bn of home loans seized from the failed bank, according to a Bloomberg report. A spokesperson for Barclays could not comment, and a spokesman for Stifel Nicolaus did not return a call seeking comment. The FDIC last week closed on a sale of $1.8bn of structured notes backed by residential mortgage-backed securities (RMBS) from seven failed bank receiverships. Write to Diana Golobay.