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$4 Billion in Secondary Trades

Mortgage News

Among nearly $4 billion in recent secondary transactions tracked by Mortgage Daily are residential, commercial and construction-and-development trades.

The aggregate value of commercial real estate loans that DebtX says it priced climbed to 79.9 percent as of Feb. 28 after rising in January for the first time in three months to 79.8 percent, a news release indicated. A year earlier, the level was 76.5 percent.

The latest number was based on 55,094 commercial mortgages for $657.1 billion. Improvement was attributed to “modestly improving fundamentals.”

The National Credit Union Administration started the year closing on a $1.5 billion offering of NCUA Guaranteed Notes Trust 2011-R1 secured by previously issued residential mortgage-backed securities. The coupon on the trust’s senior notes will be 45 basis points over LIBOR, “indicating strong investor interest,” the credit union regulator said in a Jan. 27 announcement.

Redwood Trust Inc. continues bolstering the private label securities market it helped a year ago. Redwood subsidiary RWT Holdings Inc. sold a $290 million prime jumbo RMBS this month to investors led by Credit Suisse Securities (USA) LLC as managing underwriter and J.P. Morgan Securities LLC and Jefferies & Company Inc. The most senior securities, representing 92.5 percent of the RMBS principal amount, rated “AAA” by Fitch Inc., Redwood reported.

Redwood announced the public offering mid-February, noting the RMBS to be issued by the RWT-sponsored Sequoia Mortgage Trust 2011-1 included approximately $270 million principal amount of Class A-1 Certificates with an initial interest rate of 4.125 percent per annum.

Deutsche Bank and UBS began the year preparing to issue more than $2 billion in CMBS, according to published reports. The lenders were expected to announce details of the transaction at January’s end.

Deutsche, along with Bank of America Merrill Lynch, is leading an investment of $1 billion in Freddie Mac K-011 Certificates backed by 76 recently originated multifamily mortgages. The transaction, expected to close at the end of March, will be Freddie’s third issuance this year of structured pass-through certificates, or K Certificates. Co-managers of the transaction will be Barclays Capital Inc., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. Incorporated and Wells Fargo Securities LLC.

In the meantime, Freddie and Fannie Mae have received nearly two-thirds of $34.8 billion sought from lenders for 167,000 poorly underwritten mortgages that did not meet eligibility requirements, the Financial Crisis Inquiry Commission said in a January report to Congress regarding the causes of country’s financial and economic crisis.

The government-sponsored enterprises demanded that lenders buy back the ineligible loans, and, since the beginning of 2007 through last August, have received $20.9 billion of which Fannie accounts for $11.8 billion and Freddie $9.1 billion, according to the report.

The amount sought by Fannie and Freddie is “notable in that it represents 21 percent of $163 billion in credit-related expenses recorded by the GSEs since the beginning of 2008 through September 2010,” FCIC said in the report.

Banco Popular de Puerto Rico signed a letter of intent to sell $500 million in construction and commercial real estate loans for 47 percent of their unpaid principal balance as of Dec. 31, 2010. The portfolio, consisting of approximately 75 percent non-performing loans, is expected to sell this quarter to a newly created joint venture that will be majority owned by an unrelated third party, parent Popular Inc. recently announced.

Banco Popular will make a 24.9 percent equity investment in the venture and provide financing for half of the purchase, certain closing costs and operating expenses and unfunded commitments related to construction projects.

The transaction will contribute to a $190 million, pre-tax earnings loss, as it is part of a re-classification of $1 billion in loans to held for sale at year end: The Puerto Rican bank re-classified the $500 million portfolio and another $110 million in construction, commercial real estate and land loans, while U.S. banking subsidiary Banco Popular North America reclassified $395 million in non-conforming residential loans.

Colony Capital LLC led a consortium of investors in the winning bid for a $193 million loan portfolio auctioned by the Federal Deposit Insurance Corp. The portfolio holds 1,505 residential and commercial acquisition, development and construction loans that had an outstanding principal balance of $817 million.

FDIC retained 50 percent of the managing equity interest in a limited liability company that was created to hold acquired loans and sold the rest to Colony. FDIC is paying a zero percent interest rate. Colony subsidiary, Colony Financial Inc., will contribute $5 million.

Walter Investment Management Corp. announced it closed a private placement of $135 million of RMBS notes issued by Mid-State Capital Trust 2010-1, a newly formed statutory trust sponsored by Walter Investment. The notes are collateralized by U.S. residential mortgages, building and installment sale contracts, promissory notes, related mortgages and other security agreements.

Mid-State sold principal amounts of approximately $56 million in Class A notes rated “AAA” and $78 million in Class M notes rated “A” by S&P. The Class A and M notes have initial interest rates of 3.50 percent and 5.25 percent per annum, respectively, and are expected to mature in December 2045.

Vornado Realty Trust acquired a $115 million mortgage secured by Fairfax County, Va.-based Springfield Mall, which had an outstanding balance of $171.5 million. The real estate investment trust also acquired the interest of its partnership with the owner of Springfield Mall in exchange for $25 million of 5 percent Vornado Realty LP preferred units, according to a December 2010 news release.

Commercial properties in Orlando, Fla., and Henderson, Nev., secure $25.7 million in first-position loans acquired by Silverleaf Financial. The Orlando loan purchase is collateralized by the 336-unit Lake Jasmine Apartments complex and the Henderson loan is for a 60,314-square-foot retail center, Silverleaf announced.

Over in Tampa, Fla., a Class A, 134,065-square-foot multistory office building collateralizes a $16 million all-equity, distressed mortgage note acquired by Feldman Equities Inc. and arranged by ARG Capital Partners, according to an announcement.

Retail and commercial lender FedFirst Financial Corp. reported it restructured its investment portfolio, selling $7.2 million worth of private label REMICs backed by Alt-A, fixed-rate mortgage loans at a $0.64 million pretax loss. These securities were replaced with debt securities of U.S. government-sponsored enterprises to avoid further impairment charges.

Among the companies gaining territory in the secondary market is Enterprise Community Investment Inc. The Columbia, Md.-based real estate investment services firm announced it received a license from Freddie to originate targeted affordable multifamily loans on its behalf. Targeted affordable housing loans are secured by apartment properties with rents that are affordable to low- and very-low income individuals whose incomes are at or below 80 percent or 60 percent of the area median income, respectively.

As of February, Prospect Mortgage began offering prime jumbo loans of up to $2 million to secondary market investors. Prospect’s prime jumbos consist of 30-year, fixed-rate and adjustable-rate mortgages with minimum credit scores of 700, 20 percent down payment for $1 million loans and 30% down payment and two appraisals for larger loans up to $2 million, the Sherman Oaks, Calif.-based residential retail lender announced.

Meanwhile, mortgage banker and broker Texaslending.com said it has successfully commenced secondary marketing efforts for hedging mortgage backed securities and mandatory delivery of closed mortgage loans.

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