Investors Clamour For FDIC-Owned Loans

December 23, 2009 8:06 AM EST

There is growing interest from investors for a chance to get in on a $1.1 billion package of commercial real-estate loans that had been given out by failed banks.

The Federal Deposit Insurance Corp. has received more than a dozen bids for the package of loans held by several defunct banks including the Franklin Bank, IndyMac Bank, and others according to a report in the Wall Street Journal.

The FDIC continues to hold a substantial amount of real-estate loans that continues to grow as more banks fall victim to the current economic climate. This package that is gaining interest would hardly put a dent into the FDIC's total holdings.

Once the deal is done, the transaction will account for the second-largest bulk sale of this kind since the downturn began. The FDIC is expected to announce the winning bidder for the portfolio within the next two weeks.

Investors are mobilizing to buy assets like this portfolio at a discounted price much as investors did in the early 1990s. Since many banks are not willing to sell loan packages at the currently low value, the FDIC has become a target for investors to acquire properties of this type.

Currently the FDIC is $30 billion in debt from real-estate assets acquired from the 140 banks that have gone under so far this year. The debt will be made available for sale to investors over the next 12 months.

Over the last year the FDIC has sold residential and commercial loans for sums in the range of pennies on the dollar to more than 50 cents on the dollar of the original value.

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