Fannie Mae, GE Capital Mortgage Corp., an investment advisory firm, and an institutional investor have joined forces to issue what is said to be the first mortgage security backed by loans exclusively from minority-owned institutions.
Said William Michael cunningham, president of the advisory company, Creative Investment Research: "This opens the secondary mortgage market to minority-owned financial institutions and the customers they serve. The more access these institutions have to the secondary market, the more mortgage loans they can offer to minority and low-to-moderate-income homebuyers."
Mr. Cunningham's firm says it conceived of the security and identified the institutional investor.
At GE Capital, a spokesman said GE acted as an aggregator of the loans, a role it often plays in securitizations. But this particular group of loans was unusual because all come from minority banks and thrifts.
Ray Sims, president of Capital's Residential Express division, said, "It's reassuring that investors are seeking to purchase pools secured by targeted investments."
The lenders were identified as Brownsville National Bank, Brownsville, Tex., Hispanic-owned; City National Bank of New Jersey, Newark, blackowned; Citizens Savings and Trust Co., Nashville, black-owned; Seaway National Bank, Chicago, black-owned; and Union National Bank of Texas, Laredo, Asian-owned.
Creative Investment says the investor is a pension fund that funded the research required to determine the feasibility of the MBS pool. Creative also is planning to manage an investment portfolio that would hold such securities.
