Key Takeaways:
– Bankrupt retail lender AmeriFirst Financial is seeking approval for a private sale of loans to pay off two warehouse lenders and fund restructuring costs.
– The retail and commercial loans worth over $5 million will be sold to non-QM lender Oaktree Funding Corp., Inc.
– The funds from the sale will be used to pay off Centier Bank and Sound Capital, the lenders AmeriFirst used to fund its mortgages.
– Oaktree will pay off the retail loans to Centier Bank and Centier Bank will release cash collateral to AmeriFirst.
– The sale will also resolve disputes between AmeriFirst and Oaktree.
– AmeriFirst filed for Chapter 11 bankruptcy protection in August and listed estimated assets and liabilities of up to $100 million.
– The transaction is expected to close within 10 days of the court approving the sale.
– A hearing on the motion for approval is scheduled for October 26.
HousingWire:
Bankrupt retail lender AmeriFirst Financial is seeking approval for a private sale of loans from a Delaware bankruptcy judge to pay off two warehouse lenders and fund restructuring costs.
If approved, AmeriFirst’s retail and commercial loans worth more than $5 million will be sold to a non-QM lender Oaktree Funding Corp., Inc., according to a motion filed by AmeriFirst and holding company Phoenix 1040 LLC earlier this month.
Law360 and National Mortgage News first reported on AmeriFirst’s motion seeking approval of loan sales.
The funds will be to be used to pay Centier Bank and Sound Capital — which AmeriFirst used to fund the mortgages it originated.
Oaktree would pay the payoff value of the retail loans worth $4.9 million to Centier Bank. Centier, in return, would release $1.4 million of cash collateral to AmeriFirst.
With the sale, Oaktree would pay $293,000 of two closed and partially drawn commercial loans to Sound Capital to retire AmeriFirst’s obligations to Sound Capital under its warehouse line.
AmeriFirst’s sale of loans will not only pay off its secured obligations to Centier Bank and Sound Capital under their warehouse lines but also resolve disputes with Oaktree, court documents showed.
While AmeriFirst claimed that Oaktree is obligated to pay the lender $425,582 under a previous agreement with Oaktree, the non-QM lender said that the amount should be offset against money owed by AmeriFirst.
With the judge’s approval for a loan sale, Oaktree would apply $425,582 “to satisfy the unpaid 2.43% of the funded amount of the buyer loans,” according to the motion.
Oaktree, AmeriFirst and its legal counsel didn’t respond to requests for comment.
With the approval from the court, the transaction is expected to close within 10 days of the court approving the sale. A hearing on this motion is scheduled on October 26.
AmeriFirst’s request for approval to sell its loans comes less than two months after it filed for Chapter 11 bankruptcy protection in late August.
The lender had listed both estimated assets and liabilities as much as $100 million.
Against the backdrop of rising interest rates, AmeriFirst ceased forward mortgage origination while maintaining its servicing portfolio in December 2022.
Eric Bowlby, former CEO of AmeriFirst Financial, had told HousingWire it relaunched its forward mortgage origination business in June. Getting rid of regional and branch margins, the lender would offer competitive rates to buyers, Bowlby said in an interview.
Bowlby was removed as CEO when the lender filed for bankruptcy while a holding company Phoenix 1040 LLC was added as a shareholder.
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Property Chomp’s Take:
So, let’s talk about this interesting development involving AmeriFirst Financial. The bankrupt retail lender is making moves to pay off its debts and fund its restructuring costs. How, you might ask? Well, they’re seeking approval for a private sale of loans to a non-QM lender called Oaktree Funding Corp., Inc.
If the sale goes through, AmeriFirst’s retail and commercial loans worth over $5 million will be sold to Oaktree. This will allow AmeriFirst to pay off two warehouse lenders, Centier Bank and Sound Capital, which it used to fund the mortgages it originated.
The deal entails Oaktree paying $4.9 million to Centier Bank for the retail loans, and in return, Centier will release $1.4 million of cash collateral to AmeriFirst. Additionally, Oaktree will pay $293,000 to Sound Capital to retire AmeriFirst’s obligations under its warehouse line.
But this sale isn’t just about paying off debts. It’s also about resolving disputes with Oaktree. AmeriFirst claims that Oaktree owes them $425,582 under a previous agreement, but Oaktree argues that this amount should be offset against what AmeriFirst owes them. If the judge approves the sale, Oaktree will use the $425,582 to satisfy the unpaid portion of the buyer loans.
As of now, there hasn’t been any comment from Oaktree, AmeriFirst, or their legal counsel regarding this matter. However, if the court approves the sale, the transaction is expected to close within 10 days of approval. A hearing on the motion is scheduled for October 26.
This request for approval to sell loans comes just a couple of months after AmeriFirst filed for Chapter 11 bankruptcy protection. The lender listed its estimated assets and liabilities at around $100 million. Amidst rising interest rates, AmeriFirst had stopped forward mortgage origination but continued to maintain its servicing portfolio. However, in June, they relaunched their forward mortgage origination business with the aim of offering competitive rates to buyers.
It’s worth noting that Eric Bowlby, the former CEO of AmeriFirst Financial, was removed from his position when the lender filed for bankruptcy. In his place, a holding company called Phoenix 1040 LLC became a shareholder.
All in all, it’ll be interesting to see how this loan sale plays out for AmeriFirst Financial and if it helps them get back on their feet.
