The New York private-equity firm MatlinPatterson Global Advisors has come to the rescue of another ailing mortgage lender, and this time it is one with a deposit base.
The firm that earlier this year rescued the jumbo lender Thornburg Mortgage from the brink of bankruptcy this week pledged to invest $250 million in Flagstar Bancorp, a Troy, Mich., thrift company that lost $56.9 million last quarter, mostly on bad mortgage loans.
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Canyon Partners sees opportunities in corners of the mortgage, with tightened due diligence, and the auto ABS markets.
Flagstar Bank wants to merge its holding company into the bank, which would cut $15 million in annual expenses and eliminate regulatory oversight by the Federal Reserve, leaving the OCC as its primary regulator. The bank's CEO, Joseph Otting, is a former comptroller of the currency.
Over 300 ex-Flagstar employees, initially acquired by Mr. Cooper, will transition to A&D Mortgage.
The company expects that a previously announced sale of its residential mortgage servicing business will reduce its workforce by an additional 1,200 employees when the transaction is completed this quarter.
Prophecies about a wave of bank failures caused by sickly CRE loans haven't yet come true. But there are still plenty of caution signs in a saga that will take years to play out.
