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Secondary Strategies


Secondary StrategiesRecent secondary marketing activity

January 27, 2009

By staff

A Georgia-based firm hopes to capitalize on helping second-mortgage investors increase the value of their non-performing loans, while a California company is relying on its own ability to buy, restore and liquidate distressed assets. In other secondary news, Citigroup’s mortgage lending unit has apparently made some changes in its correspondent operations.Pools of second mortgages are trading at prices that are at or near the bottom, The Phoenix Group predicted in a new release today. The Duluth, Ga.-based firm — which solicits investors to utilize its “holistic” approach to squeezing more value out of non-performing second liens — said that during the next 12 to 24 months, relatively high supply will dry up and second-mortgage prices will turn higher.

“Our solution creates a channel to buy, service and sell delinquent second-mortgage assets that require specialty loan-loss mitigation and liquidation,” Phoenix Chief Operations Officer Sarah Barry said in the statement.

Orange, Calif.-based Kondaur Capital Corp. reported last week that it purchased 2,000 distressed residential loans with balances totaling $378 million during December. The nearly two-year-old company acquires, services and liquidates mortgages with regulatory, underwriting or performance issues.

Kondaur also announced a $175 million private-offering commitment from a New York financial institution.

CitiMortgage didn’t shed much light on an inquiry about moves in its correspondent unit. In response to a request from for information about whether it terminated of some of its correspondent customers that rely on mortgage broker originations, a spokesman noted, “We continue to focus on doing business in a controlled environment with an emphasis on quality.”

He said the company communicated to its correspondent and wholesale customers last week that “CitiMortgage remains committed to serving the channels of business we serve today.”

Bidders are being solicited by Mission Capital Advisors LLC for a $140 million pool of multifamily loans, an announcement earlier this month said. The 15 defaulted loans are secured by recently renovated properties in Houston and Austin, Texas with “strong operating cash flows.”

The Federal Agricultural Mortgage Corp. has paired up with the Independent Community Bankers of America to provide ICBA members with discounted Farmer Mac offerings, a recent statement said. Support for secondary market delivery is also included in the alliance.

Special discounted options available to the community bankers include loans with terms ranging from 15 to 30 years where the rate is fixed for 10 years, a program where the rate adjusts every five years and a LIBOR offering that adjusts monthly.

A collateral risk scoring program from and the Arizona Regional Multiple Listing Service is intended to improve risk forecasting on mortgages secured by Phoenix-area properties, a press release this month said. The service is similar to credit scoring and provides grades of risk prior to funding or purchasing the loan.

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