NewState Capital Co., Ltd., the operating subsidiary of Racom Systems, Inc., has signed a letter of intent with KorAm Bank and Central Banking Corp. of Korea to sell its NewState's Korean mortgage loans to Korean investors.
Central Banking will act as the arranger of the loan sale, and KorAm Bank will buy the mortgages and pool them into mortgage-backed securities for resale, Racom said. The mortgages to be sold will conform to certain underwriting criteria as jointly agreed between NewState and KorAm Bank.
Ernest Kim, chairman of Racom, said the venture would allow for a reduction in funding costs, which would in turn benefit Korean residents via lower mortgage rates and a greater lending capacity.
NewState Capital holds about $84 million in mortgage loans, including some originated in Korea.
KorAm Bank is a Korean commercial bank formed by such Korean institutions as the Samsung and Daewoo groups, and BankAmerica Corp.