The Federal Deposit Insurance Corp. (FDIC) is preparing for a "test sale" of troubled real estate loans under its new 'Legacy Loan Program' and wants to send the mortgage package to investors by next month.
"We have received initial positive interest from institutions after contacting them to assist us in this pilot and hope to have the first sales package out to investors in June," the agency said in a statement. FDIC has already solicited public comments on the Legacy Loan Program, which could remove $500 billion in high risk mortgages from the banking system if private investors put up $50 billion in capital to invest in public-private investment funds.
The public comments have been "useful," the agency said, and it continues to "craft a "workable framework" to sell pools of residential and commercial real estate loans. The test sale will "help guide and build the foundation for the larger program," FDIC said.