IAC Is Auctioning $2.1B in Servicing

Washington-In a sign that the bulk market for servicing rights could be showing a small glimmer of life, Interactive Mortgage Advisors is auctioning off a $2.1 billion package of receivables for an undisclosed seller.

Recently, Irwin Financial, which posted heavy losses on mortgage and home-equity lending in the first quarter, sold $900 million in second-lien servicing rights to Green Tree Servicing LLC, which isbased in St. Paul, Minn., for an undisclosed sum.

The Irwin sale was brokered by Milestone Merchant Partners of Miami.

At a recent servicing conference, Merchant managing director Jeff Levine noted that the bulk market for servicing was exceedingly slow, citing, among other things, the anticipation of higher prepayment speeds.

Mr. Levine noted, however, that despite the anticipation of higher prepayment speeds, servicing isn't necessarily running off all that fast.

When it comes to refis, many borrowers are submitting applications but that doesn't necessarily mean they will qualify for mortgages given declining home values, higher unemployment and much tighter underwriting standards than a year ago.

"We still think there's an arbitrage to own bulk," said Mr. Levine.

Over the past few months the bulk market has been virtually dead with few of the mega-buyers willing to consider an investment except at rock-bottom prices.

As for the IMA offering, bids are due later this week. Interactive is based in Denver.

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