Ginnie Mae is contemplating selling the $1.3 billion residential servicing portfolio that it recently seized from Lend America of Melville, N.Y.

An agency spokeswoman confirmed that Ginnie Mae recently took control of the receivables and placed it with a subservicer — Loan Care Servicing Center of Norfolk, Va.

"We just completed the transfer and are performing our due diligence," she said, adding that "We cannot make a determination on the sale of servicing rights until that process is completed.

Of course any final decision will be made based on what is in the best interest of taxpayers." Investment banking sources say the portfolio is suffering from higher than average delinquencies.

Ginnie Mae and Federal Housing Administration suspended Lend America last month. The company laid off most of its work force and is no longer funding new loans.

Meanwhile, in other servicing news, the Federal Deposit Insurance Corp. (FDIC) hopes to complete the sale of AmTrust's $20 billion servicing portfolio some time in the second quarter, according to an agency spokesman.

"It will be done through a competitive auction process," the spokesman added but could not provide further details because it is too early in the sale process. Interested bidders are expected to include some of the nation's top 10 ranked servicers but also private equity firms that have entered the space the past two years or are looking for an entry point, said investment banking officials.

The FDIC spokesman said he had no information regarding the future of AmTrust's servicing platform. The government took control of AmTrust Bank of Cleveland a month ago, selling its branches and some of its assets to New York Community Bank (NYCB).

NYCB, said the spokesman, agreed to service AmTrust's portfolio for "up to a year while we looked for a buyer [of the servicing rights]."

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