In what is believed to be one of the largest government auctions of mortgage servicing rights in quite some time, the Federal Deposit Insurance Corp. is offering a $1 billion package of residential receivables that belonged to the now defunct Franklin Bank S.S.B. of Houston.

The agency has hired Interactive Mortgage Advisors, LLC, Denver, to broker the sale. Franklin — whose largest single shareholder was MBS co-inventor Lewis Ranieri, was closed by the government in November.

A source familiar with the deal said it has taken the FDIC all year to finally approve the transaction. Bidders are likely to include some of the nation's largest banks as well as several hedge funds that are acting as "vulture funds" in the distressed whole loan market. The bid deadline is August 14.


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