NYCB in Talks to Offload Mortgage Risk, Exploring Loan Sales
- Bank considers a credit-risk transfer backed by mortgages
- Regional lender’s shares have plunged on real estate concerns
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New York Community Bancorp has been reaching out to investors for capital to finance a large portfolio of residential mortgages as pressures on the regional lender mount, according to people with knowledge of the matter.
The company is seeking third-party capital for a portfolio of residential mortgages held under its Flagstar Bank unit. Among the options is a synthetic risk transfer backed by a portfolio of about $5 billion of home loans originated when interest rates were lower, said the people, who asked not to be identified discussing information that isn’t public. In a synthetic securitization, banks offload their exposure to loans by effectively transferring the risk of the assets to the buyer.