Stanley Tate, the North Miami real estate developer who helped oversee the thrift industry's bailout two decades ago, says he has raised $1 billion to bid on mortgages using financing from President Obama's rescue plan.
Tate said he will buy loans for his fund through the Public-Private Investment Program, which Treasury Secretary Timothy Geithner unveiled last month. The Treasury, the Federal Reserve Board and the Federal Deposit Insurance Corp. will provide private investors financing to buy as much as $1 trillion of hard-to-sell real estate assets from banks.
Tate was an adviser and nominee to head the Resolution Trust Corp., the agency formed in 1989 to liquidate assets seized from failed savings and loans. The RTC used similar risk-sharing and financing strategies to help liquidate about $400 billion of mortgages and other assets, said L. William Seidman, who oversaw the agency as the FDIC's chairman from 1985 to 1991.
Former RTC officials are now finding their experience in demand.
"I used to think before all this that a nickel and having been president of the RTC Oversight Board would not buy a cup of coffee," said Peter Monroe, who held that title from 1990 to 1993. "But now people are actually willing to listen to me." His National Real Estate Ventures LLC is part of a group that plans to participate in the Treasury program.
Tate set up the AmeriBid Opportunity Fund I LLC in May to raise $250 million to acquire residential and commercial real estate and mortgages, according to documents filed Aug. 8 with the Securities and Exchange Commission.
He said in an interview that the fund ended up with commitments for four times that amount from about eight investors.
Obama's comments during his presidential campaign about the need to get banks lending again signaled that he would start something like the PPIP once elected, Tate said.
Thomas Capasse, a principal at Waterfall Asset Management LLC, a New York firm that invests in past-due home loans and mortgage-backed securities, said there are 10 to 15 standalone funds with that $250 million or more that are dedicated to buying distressed mortgages.
Tate plans to repackage loans acquired through the program and sell them to smaller funds and institutions that lack capital to bid themselves.
He said his company has hired about two dozen former RTC officials who have expertise in pricing, pooling and packaging loans for sale.
"We have got the appraisal experience, and we have good market experience," Tate said. "At the RTC, we did a huge amount of auctioning."