Accredited Home Lenders agrees to trade $1 billion of loans with right to repurchase

By Lisa Kerner

Charlotte, N.C., Aug. 21 - Accredited Home Lenders Holding Co. agreed to trade approximately $1 billion of loans under a 90-day purchase agreement with an unnamed investor at an advance rate comparable to what the company currently receives from warehouse lenders.

On Aug. 17, Accredited settled an initial pool of $500 million. The remaining loans will trade every other week with the final sale of the loans expected to occur by October.

The agreement allows Accredited to repurchase all of the loans traded through mid-November at a premium to the advance rate. Accredited's call right expires if the company does not repurchase the loans by mid-November and the investor will keep the loans.

"If the market improves to a rational level, our intention is to repurchase these quality loans by mid-November and sell or securitize them," chairman and chief executive officer James A. Konrath said in a company news release.

While the transaction will not impact Accredited's liquidity, it will reduce the San Diego mortgage company's exposure to margin calls.

A small holdback reserve is included in the agreement, allowing the purchaser to reject loans that do not meet certain criteria.

About $600 million of Accredited's loans are not covered by the agreement, funded instead by warehouse credit facilities and cash.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.