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Wells Sells Large NPLs

Washington-Wells Fargo & Co. has apparently found a buyer for a $600 million portfolio of nonperforming subprime loans, according to investment banking officials.

However, as Mortgage Servicing News went to press it was unclear who the investor is or whether it will be servicing the loans itself or outsourcing that function.

The buyer may not have bought the entire package but most of it, said one source. "I think most of it was sold," he added.

A Wells mortgage spokesman had not returned telephone calls about the matter. In the past the bank - the nation's second largest residential servicer with $1.78 trillion in receivables - has not commented on such auctions.

"Thanks to Wachovia, Wells has a lot of product to deal with," said one loan advisor. Wachovia is a large troubled bank that Wells swallowed last year. It has a multi-billion portfolio of problem payment-option ARMs.

Investment bankers believe that the private sector nonperforming loan market will only pick up steam once the government officially pulls the plug on the Treasury Department's "Public-Private Investment Program" for delinquent mortgages/MBS and the Federal Deposit Insurance Corporation's "Legacy Loan Program."

An investment banker who applied to be a contractor to the FDIC program told this newspaper that the agency "has more or less told us that nothing's going on right now."

In other auction news, Mortgage Industry Advisory Corp. is offering investors two different bulk portfolios of mortgage servicing rights, one that includes a package of troubled GNMA receivables.

MIAC is offering a $336 million portfolio of Freddie Mac and private investor servicing rights, and a $250 million package of Government National Mortgage Association package rights.

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