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Acquisition of FDIC seized assets.

Posted by UtahCribs, Real Estate, Homes on March 26, 2009

Over the last couple of months we have been asked several times about the buzz around the potential to buy FDIC seized assets? I know a lot of you may be potential interested in this type of an investment opportunity. There are many opportunities to invest in this current market situation, buying FDIC assets can be a great investment with the right team together to handle the process. Below I have included some FAQ’s to help you better understand what the opportunity consists of. If you have any additional questions please contact us and we will get you more info..

Summary

An independent agency of the federal government, the FDIC was created in 1933 in response to the thousands of bank failures that occurred in the 1920s and early 1930s. Since the start of FDIC insurance on January 1, 1934, no depositor has lost a single cent of insured funds as a result of a failure. Through the past century the FDIC has stepped in when banks either fail or are close there too. Once seized by the FDIC the bank depositors are insured up to $250,000 and the FDIC begins the process of refunding depositor and liquidating the banks assets.

Over the past 20 years there were a number of failed banks, from what we have reviewed there were and average of 9 a year throughout the United States. As of March 1st 2009 there have been 29 this year alone! Accordingly, many files that we have reviewed for sales in the 1990’s went for 80-90 cents on the dollar. With the increase in seized banks and the increase in inventory some of the most recent loan pool sales have gone for 30 cents on the dollar.

Frequently Asked Questions for Asset Sales

1. What is a loan sale?
A loan sale is a commonly used term for the sale of loans or loan pools. Loans acquired by the FDIC from failed financial institutions are generally sold in pools through sealed bid sale or English outcry auction.
2. How are sales structured?
Typically, sales contain loans that have similar characteristics. The loans are refined into pools according to specific criteria. Pooling considerations may include loan size, quality, type, collateral and location.
3. What documents are available on the site?
The FDIC provides documents for the sale offering and the individual loan pools. The documents that can be found are the: Invitation to Bid, Bid Instructions, Purchaser Eligibility Certification, Loan Sale Agreement, Loan Spreadsheets and other relevant documents.
4. Are loans an appropriate investment for me?
Every interested party, based on their own circumstances, must determine whether loans are a suitable investment. Prospective purchasers must have the financial sophistication and resources sufficient to evaluate and bear the economic risks of such loan purchases.
5. Are there any restrictions to purchasing loans from the FDIC?
Yes. The Purchaser Eligibility Certification identifies prospective purchasers who are not eligible to purchase assets from the FDIC under the laws, regulations and policies governing such sales. The FDIC must receive an executed Purchaser Eligibility Certification from the winning bidder upon notification of bid award. The Purchaser Eligibility Certification is available on the website of the loan sale adviser responsible for a particular sale. Purchasers will supply the completed form to the loan sale adviser.
6. Does the FDIC only sell distressed or troubled loans?
No. The loan portfolios of failed financial institutions usually contain a variety of performing and non-performing loan products including mortgage, commercial, consumer loans, etc.
7. Does the FDIC guarantee the performance of loans being offered for sale?
No. The FDIC makes no representations or warranties in connection with any of the loans. The only remedies or recourse provided to the buyer are those set forth in the Loan Sale Agreement. Generally, all risk associated with the loans are passed to the buyer.
8. May prospective purchasers review the loan files?
The FDIC encourages file reviews. Interested parties must contact the FDIC as instructed in the Notice of Loan Sale to schedule due diligence appointments.
9. Is there anything required to review files or obtain specific information on the loans in a given sale?
Prospective purchasers must execute the Confidentiality Agreement that is provided either online or in person at the due diligence location. The FDIC must receive an executed Confidentiality Agreement before it will allow access to files or other specific loan information. The Confidentiality Agreement form can be obtained at the following link:

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3 Responses to “Acquisition of FDIC seized assets.”

  1. Alaska Financial Group said

    package up to 1 M.

    Matt Bobich
    907-563-2655 Any time

  2. Alaska Financial Group said

    Interested in packages $500K and up.

    Matt Bobich,
    Alaska Financial Group
    907-563-2655

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