Legacy Loans Program

On March 23, 2009, the Treasury – in conjunction with the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve – announced the initial details of its Public-Private Investment Program (PPIP) which is designed to (i) remove toxic real estate loans and securities from the balance sheets of U.S. depositary institutions, both large and small, which are insured by the FDIC (Participant Banks), (ii) rejuvenate real estate credit markets and (iii) restart the real estate loan securitization market. PPIP is divided into two programs, (a) the Legacy Loans Program dealing with residential and commercial real estate loans held by Participant Banks, and (b) the Legacy Securities Program dealing with residential and commercial mortgage backed securities which were originally issued prior to 2009 and are presently held by Participant Banks.

On March 26, 2009, the FDIC held a conference call with market participants to provide an overview of the Legacy Loans Program and to commence a two week comment period (ending April 10) in which market participants’ input is welcome to help structure the program. Troutman Sanders participated on this conference call and will continue to participate in the structuring phase of the Legacy Loans Program.

This Advisory addresses the Legacy Loans Program.  For more information regarding the Legacy Securities Program, please refer to our Advisory that can be found here.

The following links lead to more information regarding this program:

Synopsis of Legacy Loans Program

Step-by-Step Process for Purchasing Eligible Loan Pools

A Sample Legacy Loans Program Investment

Questions Raised by the Legacy Loans Program

Troutman Sanders’ Role

While FDIC officials have alluded to a time period of 8-10 weeks before the first auction occurs, Troutman Sanders has already assembled an experienced multi-disciplinary team to guide clients through the Legacy Loans Program, as well as other programs established as part of Treasury’s Financial Stability Plan. We look forward to assisting existing clients and new clients with opportunities that will be created through the new Public-Private Investment Program. Specifically, our team can assist Participant Banks and private investors with involvement during the two week comment period and with their future participation in the Legacy Loans Program.

Please continue to check our website, as we will continue to follow developments related to Legacy Loans Program and to update this advisory with additional relevant information as soon as it is released. If you have any questions or would like to contact a member of our Legacy Loans Program team, please feel free to call any of Troutman Sanders lawyers listed above.

CONTACT

Michael “Mike” A. Leichtling
212.704.6257

Jake Lutz
804.697.1490

Miles M. Borden
212.704.6161

Anthony D. Greene
212.704.6194