Angelo Gordon & Co. has acquired at a discount $267 million in soured commercial mortgages from the branchless lender Bancorp Bank.
The $26.5 billion investment firm, founded by John Angelo and Michael Gordon, agreed to pay $209.6 million for the pool of loans through a newly registered and shared legal entity named Walnut Street, according to a recent regulatory filing. Angelo Gordon is a 51% majority owner of the vehicle and Bancorp Bank controls 49%. Bancorp Bank took a $3.9 million charge on the sale.
Officials at Angelo did not respond to requests for comment, nor did officials at Bancorp.
Lenders with large portfolios of bad mortgages leftover from the financial crisis are selling them at discounts amid strong demand from investment firms. Investors have focused on residential assets where supply of bad loans is still plenty.
OceanFirst Financial Corp took a 18.6% haircut in October to sell $23 million of bad residential loans, filings for that company show.
Angelo Gordon has packaged $434 million of distressed residential mortgages into securitizations since the 2012, JP Morgan Chase data show. The firm is also said to be raising as much as $750 million for a new fund through JP Morgan Chase's private bank, Bloomberg News reported.
Banks may be sitting on as much as $230 million of non-performing residential loans, according to JP Morgan Chase. As much as $50 billion in bad residential mortgages have changed hands in whole loan form, and another $15 billion have been securitized.
Lone Star Funds has been the most active securitizer with $5.2 billion issued to date.
Bancorp is also marketing three other portions of its community bank loan book, which it is divesting. Those remaining books include performing commercial loans, a smaller portion of loans collateralized by out-of-region properties, and at least $90 million in residential mortgages.
