Wall Street to securitize delinquent loans -Kondaur

By Al Yoon

NEW YORK, May 24 (BestGrowthStock) – Wall Street firms in coming
weeks will likely package delinquent loans into securities as a
way to satisfy the higher yields demanded by investors, Jon
Daurio, chief executive officer of distressed loan buyer
Kondaur Capital Corp, said on Monday.

Creating residential mortgage-backed securities with
“non-performing” loans would be the latest incarnation of a
market that has been mostly dormant since the credit crisis
sidelined issuers. Over the past year there have been a handful
of bonds backed by existing mortgages, and just one supported
by fresh loans.

“I’m being solicited heavily to securitize my stuff,”
Daurio told reporters in New York after a panel sponsored by
the Mortgage Bankers Association.

Daurio’s Kondaur Capital is one of the largest buyers of
U.S. non-performing loans. After acquiring the loans, the
company works with borrowers to get mortgage payments current,
or initiates other processes — such as deeds-in-lieu of
foreclosure — to seize the property.

Securitization of non-performing loans may be most
important to the investors who in recent months have been
willing to accept lower-quality assets in return for greater
yield. Some of these RMBS and other risky assets have faltered
lately, as expanded fallout from Europe’s sovereign debt crisis
has caused investors to reassess risks they had taken on
expectations the U.S. economy was on the mend.

Even so, Daurio said during the panel discussion that
securities backed by non-performing loans would appear by the
end of June.

Redwood Trust (RWT.N: ), a California real estate investment
trust, last month sold a $222.4 million mortgage bond backed by
newly created loans. More deals of its kind would aid the
housing market by giving lenders confidence they can find
buyers for their loans.

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(Editing by Dan Grebler)

Wall Street to securitize delinquent loans -Kondaur