Nearly $500 million in loans have recently been traded, while an $11 billion servicing portfolio is on the market. Two of the sellers were financial institutions based in Hawaii.
Thornburg Mortgage Inc., which is now known as TMST Inc., has seen wide interest in a servicing portfolio of 16,998 loans for $11 billion that it is auctioning off, Reuters reported this month. Dozens of interested parties — including mortgage lenders, banks, investment firms and special servicers — are reportedly interested in the portfolio.
Thornburg was a big originator and servicer of jumbo mortgages until secondary mortgage markets began freezing up in August 2007 — forcing the Santa Fe, N.M.-based company to sell off assets and halt new business. By February 2008, Thornburg was bombarded with margin calls — which it attempted to manage. But by April 2009 — the company threw in the towel and announced plans to liquidate. A month later, it filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in U.S. Bankruptcy Court for the District of Maryland.
The portfolio sale was reportedly approved by Thornburg’s bankruptcy trustee last month.
Honolulu-based American Savings Bank, F.S.B., sold a $225 million portfolio of 5.19 percent mortgage-related securities, a December news release indicated. An after-tax charge of $19 million was taken.
“The securities were backed by mainland mortgages and it was unclear when mainland residential markets might recover,” Constance H. Laud, president and chief executive officer of parent Hawaiian Electric Industries Inc., said in the statement. “The improvement in the bond markets gave us the opportunity to liquidate these securities.”
A $135 million portfolio of loans was sold by AMCORE Bank, N.A., according to a December statement from the Rockford, Ill.-based firm. The sale was part of a strategy to shore up capital. AMCORE called the loans “non-strategic” and “non-relationship.”
While details about the loans or the terms of the sale weren’t disclosed, AMCORE owned $0.5 billion in residential loans, $1.3 billion in commercial mortgages and $0.5 billion in construction-and-land-development loans as of Sept. 30, 2009, according to Federal Deposit Insurance Corporation data.
Central Pacific Bank completed a sale of $48 million in commercial real estate loans at par, parent Central Pacific Financial Corp. disclosed last month. In addition, another $62 million in commercial mortgages were sold at a 10 percent discount during the fourth quarter. The sales were part of a number of actions being taken to meet the requirements of a consent order issued by the Federal Deposit Insurance Corporation.
Honolulu-based Central Pacific said that it engaged an outside loan review firm, Alvarez & Marsal, to conduct an independent review of its commercial mortgage portfolio and expects to continue pursuing loan sales.
In re TMST Inc.
Case No. 09-17787, May 1, 2009 (U.S. Bankruptcy Court for the District of Maryland).
