Homebuilder Purchases $3B in Loans from FDIC

Lennar Corp. late Wednesday purchased $3.05 billion of troubled loans from the Federal Deposit Insurance Corp., through a "structured transaction" deal. By creating limited liability corporations, Lennar is splitting the ownership stake in the loans 40/60 with the government taking the latter share. Overall, the Miami-based homebuilder is buying two pools of notes (5,500 mortgages) including distressed residential and commercial real estate assets. The packages were culled from 22 failed banks. In total, Lennar is putting up just $243 million in cash to acquire its stake with the FDIC providing 0% non-recourse financing of $627 million. Lennar said its subsidiary, Rialto Capital Advisors, would handle "the day-to-day management and workout of the portfolios."