Milestone to Sell AmTrust Servicing Portfolio for FDIC

The FDIC is looking for a buyer for the $20 billion loan servicing portfolio it seized from AmTrust Bank last year, and the agency has chosen the investment advisory firm ""Milestone Merchant Partners"":http://www.milestonecap.com in Washington, D.C. to manage the sale.

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AmTrust serviced about $30 billion of loans when it went under in early December, most of which had been sold to Fannie Mae and Freddie Mac, according to _American Banker_. The portfolio up for grabs reportedly includes servicing rights to some 100,000 loans, worth roughly $20 billion.

_American Banker_, citing ""investment banking officials,"" said interested bidders are expected to include some of the nation's top 10 ranked servicers, as well as private-equity firms that are new to the servicing space or are looking for an entry point.

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AmTrust, headquartered in Cleveland, Ohio, ended its 120-year-long run as the ""fourth largest institution to fail"":http://dsnews.comarticles/regulators-close-amtrust-bank-and-five-others-pushing-failed-tally-to-130-2009-12-07 in 2009. The bank was a nationwide originator of home mortgages and also offered construction and development loans.

But according to a statement from its regulator, the Office of Thrift Supervision (OTS), AmTrust ""was in an unsafe and unsound condition because of substantial loan losses, deteriorating asset quality, and insufficient capital."" OTS said a high level of AmTrust's problem assets was attributable to residential and land acquisition, development, and construction lending concentrated in Florida, California, Arizona, and Nevada.

The FDIC unloaded AmTrust's deposits and sold off its branches and some assets to ""New York Community Bank"":http://www.mynycb.com. At the time of the deal, New York Community was quick to point out that it only acquired AmTrust's _performing_ single-family mortgages and declined to take on any non-performing loans serviced by the bank or any other REOs.

According to _American Banker_, New York Community agreed to service AmTrust's portfolio for up to a year while the FDIC looked for a buyer for the servicing rights.

The auction for AmTrust's servicing portfolio is expected to take place in the second quarter of this year.