The ""FDIC"":http://www.fdic.gov has amassed a large portfolio of underperforming real estate loans seized from failed banks over the last couple of years, and the closings just keep on coming. This weekend, the 2010 failed-bank tally ""surpassed the 100-mark"":http://dsnews.comarticles/regulators-shut-down-seven-more-banks-as-2010-failures-surpass-100-2010-07-26.
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While the FDIC has managed to broker deals with most acquiring institutions recently to absorb ""essentially all"" of the failed banks' loans, some transaction announcements from the federal agency do still contain the language, ""the FDIC will retain the remaining assets for later disposition,"" further adding to the regulator's stockpile of loan leftovers.
In order to fast-track the disposition of these assets â€" most of which are the nonperforming loans that acquiring institutions did not want to be saddled with â€" the FDIC is turning to private investors in the secondary market.
The federal agency has put together an offering of $409 million of residential mortgage bonds originated or acquired by 17 failed financial institutions, according to a ""_Wall Street Journal_ report"":http://online.wsj.com/article/SB10001424052748704249004575385274221389054.html. The deal, identified as FDIC 2010-R1, will be wrapped by an FDIC guarantee and is expected to price mid-week, the paper said.
The ""Royal Bank of Scotland"":http://www.rbs.co.uk is serving as the agent putting the securitizations together for the FDIC.
Last year, the banking regulator began auctioning off loans from failed bank takeovers via structured partnerships with private companies, where the FDIC retains partial ownership and shares in any future returns on the assets.
But the agency has seen success with several secondary market deals for residential and commercial real estate assets already, so securitizations may become the disposition du jour as the FDIC continues to deal with an elevated number of bank closings and engorged holdings of nonperforming loans.