Berkadia III!

[Parsad]

Berkshire and Leucadia have teamed up again in a $490M deal for Capmark Financial Group's mortgage and loan servicing business.  Cheers!

 

http://www.bloomberg.com/apps/news?pid=20601087&sid=aiWKNGNQZyNk

[JAllen]

Here is a more detailed link:

 

http://www.earthtimes.org/articles/show/capmark-financial-group-inc-enters,946905.shtml

[link01]

interesting to see brk & lik team up again. i remember the first berkadia venture with finova. was there another one after that, before this? wonder why is this called berkadia III?

[CONeal]

interesting to see brk & lik team up again. i remember the first berkadia venture with finova. was there another one after that, before this? wonder why is this called berkadia III?

 

I've seen in past court documents where the Finova investment was referred to as Berkadia and also Berkadia II.  If anyone has any background why the two seperate companies were involved in Finova please let us know.

[BargainValueHunter]

http://www.bloomberg.com/news/2011-09-16/berkshire-mortgage-venture-to-acquire-tavernier-assets-2-.html?cmpid=yhoo

 

Berkadia Commercial Mortgage LLC, the lender and servicer backed by Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), agreed to buy banking assets from Tavernier Capital Partners LLC to expand in Florida.

 

The deal will add about $2 billion in servicing rights, mostly for commercial and industrial properties, and is expected to be completed within 30 days, Horsham, Pennsylvania-based Berkadia said today in a statement that didn’t disclose terms.

 

Berkadia, formed after Buffett’s firm and Leucadia National Corp. (LUK) acquired assets from bankrupt Capmark Financial Group Inc. in 2009, is adding business as rivals including Bank of America Corp. (BAC) scale back. The venture backs projects with funds from clients including life insurers.

[txlaw]

http://www.bloomberg.com/news/2011-09-16/berkshire-mortgage-venture-to-acquire-tavernier-assets-2-.html?cmpid=yhoo

 

Berkadia Commercial Mortgage LLC, the lender and servicer backed by Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), agreed to buy banking assets from Tavernier Capital Partners LLC to expand in Florida.

 

The deal will add about $2 billion in servicing rights, mostly for commercial and industrial properties, and is expected to be completed within 30 days, Horsham, Pennsylvania-based Berkadia said today in a statement that didn’t disclose terms.

 

Berkadia, formed after Buffett’s firm and Leucadia National Corp. (LUK) acquired assets from bankrupt Capmark Financial Group Inc. in 2009, is adding business as rivals including Bank of America Corp. (BAC) scale back. The venture backs projects with funds from clients including life insurers.

 

It's really interesting.  I was watching some of those CNBC Delivering Alpha videos earlier today, and one of the guys (I think a fellow from Blackstone) was talking about how mortgage servicing rights are being dumped by the banks at great prices because of the new capital requirements.

 

It looks like Leucadia and Berkshire were some of the first folks in the market to realize that they could capitalize on this trend. 

 

It was also interesting to watch the real estate panel because this indicates there will be a lot institutional interest in the markets that Berkadia services.  If activity markedly increases in these markets, then I wonder what sorts of volumes Berkadia could be handling in the future.

 

[BargainValueHunter]

http://www.bloomberg.com/news/2011-09-16/berkshire-mortgage-venture-to-acquire-tavernier-assets-2-.html?cmpid=yhoo

 

Berkadia Commercial Mortgage LLC, the lender and servicer backed by Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), agreed to buy banking assets from Tavernier Capital Partners LLC to expand in Florida.

 

The deal will add about $2 billion in servicing rights, mostly for commercial and industrial properties, and is expected to be completed within 30 days, Horsham, Pennsylvania-based Berkadia said today in a statement that didn’t disclose terms.

 

Berkadia, formed after Buffett’s firm and Leucadia National Corp. (LUK) acquired assets from bankrupt Capmark Financial Group Inc. in 2009, is adding business as rivals including Bank of America Corp. (BAC) scale back. The venture backs projects with funds from clients including life insurers.

 

It's really interesting.  I was watching some of those CNBC Delivering Alpha videos earlier today, and one of the guys (I think a fellow from Blackstone) was talking about how mortgage servicing rights are being dumped by the banks at great prices because of the new capital requirements.

 

It looks like Leucadia and Berkshire were some of the first folks in the market to realize that they could capitalize on this trend. 

 

It was also interesting to watch the real estate panel because this indicates there will be a lot institutional interest in the markets that Berkadia services.  If activity markedly increases in these markets, then I wonder what sorts of volumes Berkadia could be handling in the future.

 

 

Your reply reminded me of this article:

 

http://finance.fortune.cnn.com/2011/08/10/bank-of-americas-back-door-tarp/

 

$500 million is surely more than the servicing rights are worth in an arms-length transaction. How do we know? Beyond the comment that the loans are expected to "deteriorate further," the goal of the intervention can only be to fix Bank of America's capital structure, which is easier for the government to do if it overpays for the rights.

 

In short, purchasing these servicing rights was another Troubled Asset Relief Program.

 

Servicing defaulted loans can be good business if cheaply produced foreclosure paperwork isn't questioned, and if the foreclosures have equity and can be resold easily with lots of junk fees. But the mortgage servicing rights Fannie Mae bought are stinkers: they have a 13% delinquency rate, which means lots of foreclosures and loan modifications.

 

[Rabbitisrich]

The Fortune/WSJ articles on the sale of MSRs raise more questions than they answer.