A group of investors led by Residential Credit Solutions, New York, agreed to pay 37 cents on the dollar for an $898 million pool of nonperforming residential loans offered by the Federal Deposit Insurance Corp. (FDIC).
RCS also will service the pool, 96% of which is delinquent.
The NPLs were culled from the receivership assets of AmTrust Bank, Cleveland, which failed late last year. RCS's partners on the deal include CarCal Investors and RBS Financial Products. A source familiar with the matter said RBS has a "minority" interest in the loans with the other two firms taking the lead.
To facilitate the transaction the FDIC created a limited liability company to hold the NPLs, retaining a 60% stake in the LLC. The agency also will share in the profits once the loans are worked out.
The agency said it offered "1:1 leverage financing" and agreed to guarantee $169.5 million of purchase money notes issued by the LLC. The agency received five bids in total for the NPLs. Last week National Mortgage News broke the news that the agency had picked a winning bidder on the portfolio.
The FDIC is in the processing of selling AmTrust's servicing portfolio as well.