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FDIC Shifts 'Legacy' Program Focus

Washington-The Federal Deposit Insurance Corp. said it is refocusing its Legacy Loan Program to concentrate on assets held in receivership by the agency, which currently total about $18.7 billion.

In a statement, the agency credited the ability of banks to raise new capital, which has made the LLP less urgent - at least for open and operating institutions.

Instead, the FDIC will test what it calls "the funding mechanism" for various assets held and managed by its Dallas-based receivership division.

A spokesman for the agency told Mortgage Servicing News that receivership assets totaled $18.7 billion at the end of April.

No breakdown was available on what type of assets are being held by the agency. In a recent Securities and Exchange Commission filing, vulture fund PennyMac estimated that the FDIC holds at least $3 billion in residential whole loans.

Meanwhile, it appears Treasury's Term Asset-Backed Securities Loan Facility program is going nowhere in regard to residential MBS. Federal Reserve Bank of New York president William Dudley said, "We're still in the process of assessing whether a legacy RMBS program is feasible, and if it were feasible whether it would be significant enough to make a major impact."

One area that is suffering from a huge lack of liquidity is the jumbo market where no loans above the $729,750 limit are being securitized, resulting in strict terms and higher mortgage rates for consumers.

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