Thursday, July 16, 2009
Toxic Assets Become “Legacy Assets”
Dear Sue,
Since the health care debate has become front and center in the local and national news I haven’t heard much about the so-called “toxic assets”.
I last heard that the Obama administration was coming up with a way to sell the toxic assets to the public. I was even thinking of getting some like- minded friends and family members together to buy some as investments.
None of us can find any information about when the properties will be available for sale or how to buy them when they do become available.
Sue, can you help us?
Investor Ian
Dear Ian,
I too have been waiting for the “toxic asset” information to be announced. Your letter prompted me to dig a little deeper into the subject.
Toxic assets have a new name. They are now called “legacy assets.”
The plan to sell the bad or so-called “toxic” securitized loans that are attached to real estate was announced on March 23, 2009 by the Treasury Department, the Federal Reserve and the FDIC. I found the following on the www.financialstability.gov website:
“we have been working jointly to put in place the operational structure for these programs, including setting guidelines to ensure that the taxpayer is adequately protected, addressing compensation matters, setting program participation limits, and establishing stringent conflict of interest rules and procedures. Recently released rules are detailed separately in the Summary of Conflicts of Interest Rules and Ethical Guidelines .”
In other words the government is ironing out the details before implementing the plan.
The plan, known as the “Legacy Securities Program,” is being designed to get public and private capital flowing more freely and to determine the market value of the securitized assets. In other words, the government wants to be sure that the price that is paid is equal or higher than the value of the real estate (asset) being purchased.
To qualify, the securities must have been issued prior to 2009 and have originally have been rated AAA or equivalent.
I would personally suggest that you only buy those that are secured directly by the actual mortgage loans, leases or other hard assets!
If the nature of the collateral is not known it would be like buying the contents of a storage unit at auction without being able to look inside and examine what’s inside…….
The Federal Government has selected 10 private investment firms to broker the Legacy assets. Each of the ten “Legacy Securities fund managers” will receive an equal allocation of investment capital from the Treasury to be used as financing capital. The initial investment is expected to be up to 30 billion dollars with more on the horizon if it is found to be necessary. More from the website:
“The Federal Government is prepared to assist the private sector with financing the legacy asset.
The Legacy Loan Program is intended to boost private demand for distressed assets and facilitate market-priced sales of troubled assets. The FDIC would provide oversight for the formation, funding, and operation of a number of vehicles that will purchase these assets from banks or directly from the FDIC. Private investors would invest equity capital and the FDIC will provide a guarantee for debt financing issued by these vehicles to fund asset purchases. The FDIC’s guarantee would be collateralized by the purchased assets. The FDIC would receive a fee in return for its guarantee.”
The Federal Government is working on ways to increase the utilization of this program by banks and investors.
Ian, my recommendation is to go to www.financialstability.gov and find the list of Legacy Securities Fund Managers and contact them for information on how you can personally participate in the purchase of these legacy assets. It could be a matter of good Home $$’s and Sense.
Please visit my company's website for listings, forclosures and real estate news
www.seehometown.com
Since the health care debate has become front and center in the local and national news I haven’t heard much about the so-called “toxic assets”.
I last heard that the Obama administration was coming up with a way to sell the toxic assets to the public. I was even thinking of getting some like- minded friends and family members together to buy some as investments.
None of us can find any information about when the properties will be available for sale or how to buy them when they do become available.
Sue, can you help us?
Investor Ian
Dear Ian,
I too have been waiting for the “toxic asset” information to be announced. Your letter prompted me to dig a little deeper into the subject.
Toxic assets have a new name. They are now called “legacy assets.”
The plan to sell the bad or so-called “toxic” securitized loans that are attached to real estate was announced on March 23, 2009 by the Treasury Department, the Federal Reserve and the FDIC. I found the following on the www.financialstability.gov website:
“we have been working jointly to put in place the operational structure for these programs, including setting guidelines to ensure that the taxpayer is adequately protected, addressing compensation matters, setting program participation limits, and establishing stringent conflict of interest rules and procedures. Recently released rules are detailed separately in the Summary of Conflicts of Interest Rules and Ethical Guidelines .”
In other words the government is ironing out the details before implementing the plan.
The plan, known as the “Legacy Securities Program,” is being designed to get public and private capital flowing more freely and to determine the market value of the securitized assets. In other words, the government wants to be sure that the price that is paid is equal or higher than the value of the real estate (asset) being purchased.
To qualify, the securities must have been issued prior to 2009 and have originally have been rated AAA or equivalent.
I would personally suggest that you only buy those that are secured directly by the actual mortgage loans, leases or other hard assets!
If the nature of the collateral is not known it would be like buying the contents of a storage unit at auction without being able to look inside and examine what’s inside…….
The Federal Government has selected 10 private investment firms to broker the Legacy assets. Each of the ten “Legacy Securities fund managers” will receive an equal allocation of investment capital from the Treasury to be used as financing capital. The initial investment is expected to be up to 30 billion dollars with more on the horizon if it is found to be necessary. More from the website:
“The Federal Government is prepared to assist the private sector with financing the legacy asset.
The Legacy Loan Program is intended to boost private demand for distressed assets and facilitate market-priced sales of troubled assets. The FDIC would provide oversight for the formation, funding, and operation of a number of vehicles that will purchase these assets from banks or directly from the FDIC. Private investors would invest equity capital and the FDIC will provide a guarantee for debt financing issued by these vehicles to fund asset purchases. The FDIC’s guarantee would be collateralized by the purchased assets. The FDIC would receive a fee in return for its guarantee.”
The Federal Government is working on ways to increase the utilization of this program by banks and investors.
Ian, my recommendation is to go to www.financialstability.gov and find the list of Legacy Securities Fund Managers and contact them for information on how you can personally participate in the purchase of these legacy assets. It could be a matter of good Home $$’s and Sense.
Please visit my company's website for listings, forclosures and real estate news
www.seehometown.com
Labels: legacy assets, toxic assets
# posted by Sue Thompson @ 1:50 PM 
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