FDIC Securitizes $471.3 Million Worth of Mortgages from 16 Failed Bank

The Federal Deposit Insurance Corporation (FDIC) has sold a $471.3 million securitization using residential mortgages from 16 failed banks.

The Wall Street Journal first reported the sale, writing “The Federal Deposit Insurance Corp. said Friday it sold securities backed by $471.3 million of performing single-family mortgages originated by 16 failed banks. “ Housing Wire was able to get further details on the sale later in the day.

When the deal was published, the FDIC and lead manager the Royal Bank of Scotland declined to provide details citing the 144a status of the deal, which places the security as a private placement that is restricted to high-worth qualified institutional investors.

Housing Wire reported that the platform is named “FDIC 2010-R1” and is a residential mortgage-backed security (RMBS) with a total of $409m of unrated senior notes. The security broke collateral up between fixed-rate and adjustable-rate mortgages. The weighted average life of the notes is 3.66 years, priced to par with a 2.184 coupon and are backed by the FDIC.

According to Housing Wire, the subordinated certificates are comprised of “a mezzanine and an over collateralization (OC) class representing 15 percent of the capital structure. The subordinated certificates will be retained by the failed bank receiverships, which may sell all or a portion at some point in the future.”

The sources told Housing Wire that the average FICO score of borrowers was 714 and that the deal was “pretty well executed” and “not likely a reverse inquiry.”

According to the WSJ, “The lead underwriter was RBS Securities, with co-underwriters Bank of America/Merrill Lynch, Deutsche Bank and Williams Capital.”