Chimera Investment Corp. is the winning bidder on a pool of 846 high-risk loans with an unpaid principle balance of about $198.9 million recently auctioned by Freddie Mac.
The loans, which are currently serviced by JP Morgan Chase Bank, were liquidated via “pilot structured sale,” which requires the winning bidder to, upon completion of collateral due diligence, purchase and simultaneously securitize the loans and initially take a first loss position on the subordinate tranche, Freddie Mac says in a release.
Investors that purchase these loans are required to demonstrate substantial experience in managing both high-risk mortgages and securitizations.
In the case of this deal, Freddie Mac will guarantee and purchase the senior tranches of the securitization at par. It may retain or sell the guaranteed senior tranches.
The aggregate loan-to-value ratio, based on broker price opinion, is about 70%. The average loan balance is about $235,000.
The transaction is expected to settle in October.
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