The Federal Deposit Insurance Corporation (FDIC) has closed on a sale of 40% equity interest in a limited liability company (LLC) created to hold approximately $898m of primarily non-performing residential loan assets out of AmTrust Bank.
The winning bidder of the structured transaction is a three-party consortium made up of Residential Credit Solutions, CarVal Investors and RBS Financial Products at a price of approximately 37% of unpaid principal balance.
FDIC said that as an equity participant, it will retain a 60% stake in the LLC and share in the returns on the assets. The FDIC offered 1:1 leverage financing and has agreed to guaranty Purchase Money Notes issued by the LLC in the original principal amount of approximately $169.5m.
The FDIC as receiver for the failed bank will convey to the LLC a portfolio of approximately $898m residential real estate loans, of which approximately 96% are delinquent. Thirty-seven percent of the collateral in the portfolio is located in Florida, 11% in California, 5% in each of Arizona, Nevada and Massachusetts, and the balance in 42 other states.
As the managing member of the LLC’s managing equity owner, Residential Credit Solutions will provide for the management, servicing and ultimate disposition of the LLC’s assets. RCS will apply the HAMP loan modification protocol to eligible loans in the portfolio.
AmTrust bank failed in December 2009, and the FDIC immediately entered into a purchase and assumption agreement with New York Community Bank, Westbury, New York, to assume all the deposits and approximately $9bn of the assets. This transaction completes the sale of the majority of the remaining assets of AmTrust Bank.