After a global financial crisis started and crippled the mortgage-backed lending business, the Federal Deposit Insurance Corp. (FDIC) made a great splash by productively selling what many called real estate ?toxic debt? into the open market.
The sale of toxic real estate debt by the Federal Deposit Insurance Corp. began in earnest in September 2009. These poorly underwritten loans were created ? and in some cases securitized ? between 2005 and 2008.
The FDIC has taken control of 380 banks and has sold more than $2.6 billion of individual or pooled commercial real estate loans since 2008.
Now industry specialists are looking at prices the agency fetches to determine just how their own loans should be valued. Traders also are looking to the FDIC?s sales of partial interests in the huge insurer?s portfolios to price new conduit loans and CMBS 2.0 bonds.
The first public-private investment transaction hit loan trading desks approximately one year ago. Traders analysed details of the deal for months. Colony Capital and investment partner Cogsville Group finally paid the Federal Deposit Insurance Corp. 59 percent of par value for two mixed pools. Half the loans were current, and half were delinquent.
The market believed then that delinquent commercial real estate loans were worth about 40 percent of par value and that loans current on payments were worth 80 percent of par value. That price point has held steady, and is reflected in published prices from traders like DebtX, a clearinghouse for many private loan sales.
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Source: http://mortgageticket.com/real-estate-and-personal-finance/fdic-productively-sells-toxic-debts.html
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