Manatt Closes One Of The First Loan Portfolio Sales In The Current Market: Lessons Learned On How To Manage A Transaction In Today's Environment


It seems nowadays that every morning when you pick up the newspaper, there are more and more stories about financial institutions failing, or at least reporting billion-dollar losses. As a result, federal regulators, shareholders and investors alike are taking an ever increasing interest in the balance sheets of financial institutions. And these institutions are looking for ways to reduce their credit exposure in order to satisfy their regulators and shareholders. While the federal government?s initiative to purchase certain mortgage and mortgage related assets from financial institutions undoubtedly will impact the market for distressed assets, we continue to view private portfolio sales as a viable and important alternative for a bank trying to adjust its exposure to mortgage-related credit risk. One regional banking institution (the ?Bank?) was recently able to accomplish just that and serves as an example to other financial institutions of how to take aggressive action in cleaning up one?s balance sheet. With the assistance of Manatt, Phelps & Phillips, LLP (?MPP?) and Le Plastrier Development Consulting, Inc., the Bank sold a residential development loan portfolio comprised of multiple acquisition and construction loans, as well as real estate owned (REO) property. This was one of the first successfully completed sales of what is expected to be many portfolio dispositions for the financial industry in this volatile market.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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