NEW YORK (
) -- Banks such as
Bank of America
are likely to divest more nonperforming mortgages out of their distressed asset portfolios over the next several years, according to industry watchers.
"You have banks like
and Wells Fargo. They are out selling," said Jason Kopcak, managing director and head of whole loan trading at Cantor Fitzgerald said in a video interview. "You have larger banks like Chase and Band of America. They are looking to do dispositions and preparing their assets for sale."
Banks Shop Mortgage Assets
Regional banks such as
are also selling -- or preparing to sell -- nonperforming mortgage assets to get them off balance sheets, said Kopcak.
Some of the most active buyers of distressed single-family residential whole loans include
. Private equity firms and hedge funds such as
have also been scooping up distressed mortgage assets.
Banks are reportedly pricing residential mortgages at around 63 cents to 66 cents of their current value.
The sales of mortgages by banks will be prompted further by put-back concerns, said Carla Zilka of NexGen Advisors. Bank of America, which owns Countrywide, is just one of the banks that could take significant losses if it is forced to buy back $47 billion in soured mortgage-backed securities.
"The issues with put-backs can certainly be a catalyst for the banks to sell and limit risk," said Zilka. "Put-back exposure does not arise from mortgages the banks own, rather from mortgages they sold to others, directly or as part of a pool of mortgages underlying a mortgage-backed security ... the potential repurchase of those creates huge liability on the banks balance sheet."
Besides limiting risk, many banks with nonperforming mortgage assets see the current market as opportune for selling because liquidity in the credit market is opening up for potential buyers.
National Penn Bancshares
is one of the banks that has been gradually selling off some nonperforming mortgage loans to deleverage its balance sheet.
"The last two years the markets were frozen. Recently the markets have opened up so you are seeing some sales, but not a lot of bulk sales of debt," National Penn's CEO Scott Fainor told
. "There are more buyers in the market and a lot of loans are starting to be sold. "
--Written by Maria Woehr in New York.
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