DURHAM, N.C. – Self-Help FCU has teamed with a Chicago community development group to buy 1,100 mortgages mostly held by Hispanic borrowers from the FDIC that were made by the failed Second Federal Savings & Loan Association.
The community development credit union and Chicago’s Resurrection Project will pay $59 million for the mortgages, which have a face value of $141 million, valuing the portfolio at 38 cents on the dollar.
Second Federal, which lent mostly to Hispanics and was a pioneer in lending to undocumented immigrants with taxpayer identification cards, failed in July. A unit of Wintrust Financial Corp. acquired Second Federal's deposits in a purchase and assumption deal but didn't bid for the loans.
Self-Help and Resurrection Project have pledged to keep as many families as possible in their homes. “We plan to aggressively assist struggling homeowners to avoid foreclosures,” said Martin Eakes, president of Self-Help.
“The mission of both TRP and Self-Help is to build healthier communities,” Raul Raymundo, president of Resurrection Project. “But to do so we need to also thwart the deterioration of our neighborhoods. With the acquisition of these loans, we will be helping hundreds of families remain in their homes.”
The two originally joined to bid initially for Second Federal's deposits and loans, but the FDIC rejected the bid in favor of Wintrust's deposit-only offer because it said the cost to its insurance fund would have been higher than just liquidating the institution.