DSNews The homepage of the servicing industry
The ""U.S. Small Business Administration"":http://www.sba.gov (SBA) recently announced the first nine loan pool originators authorized[IMAGE]
by the agency to assemble and sell pools of ""504 program"":http://www.sba.gov/financialassistance/borrowers/guaranteed/CDC504lp/index.html first mortgage loans. The federal agency called this ""a major step to jump-starting a secondary market"" that will make financing more accessible for small businesses.
The new program was approved under the American Recovery and Reinvestment Act.
Prior to the recent disruption in the credit market, the private secondary market for these loans flourished, but it has been slow to recover as the economy has started to rebound.
[COLUMN_BREAK]SBA expects this new program to breathe new life into that secondary market and improve access to credit for small businesses by providing a resource that can help boost liquidity to small business lenders.
SBA Administrator Karen Mills says the added support to re-launch the 504 first mortgage secondary market will help leverage capital for small businesses to support growth and create new jobs.
Under the program, the SBA will provide a government guarantee on loan bundles that include portions of eligible 504 first mortgages, assembled by approved pool originators and sold to third-party investors.
Lenders will retain at least 15 percent of each individual loan, pool originators will assume 5 percent of the risk, and the SBA will guarantee the remaining 80 percent.
To be eligible to be included in a pool, the first mortgage must be associated with a 504 loan disbursed on or after February 17, 2009. The program will be in place until February 16, 2011, or until $3 billion in new pools are created.
The ""pool originators approved"":http://www.sba.gov/aboutsba/sbaprograms/elending/secondarymarket/index.html by SBA so far include: Bank of America, Cantor Fitzgerald & Co., Citizens Bank, Coastal Securities, Inc., Community South Bank, Fidelity Bank, Meadows Bank, Morgan Stanley Bank, and Voyager Bank.
