USB Must Use Loan Mods for Downey

Newport Beach, Cal. -U.S. Bancorp of Minneapolis will have to use FDIC-sanctioned loan modification programs for troubled mortgages at two thrifts it acquired in late November.

One of the thrifts, Downey Savings and Loan here, was a top 40 ranked residential lender, and once a large player in alt-A, payment-option ARMs and subprime.

The thrift had $2.03 billion in nonperforming assets as of early fall, representing 14.68% of its total holdings.

The Federal Deposit Insurance Corp. was named receiver of the thrift and then immediately sold Downey and another ailing depository, PFF Bank & Trust of Pomona, Calif., to USB, the nation's 11th largest mortgage banking company. According to FDIC, USB will purchase "virtually" all of the two's assets under a loss sharing agreement with the government. Downey had $12.8 billion in assets, PFF $3.7 billion.

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