Newcastle announces acquisition of 11,300 mortgages
By MortgageDaily.com staff
3/7/2006

A New York-based real estate investment trust sees opportunity in the currently depressed mortgage market.

Approximately 11,300 subprime residential mortgage loans were acquired by Newcastle Investment Corp., according to an announcement Monday. The $1.5 billion portfolio has a 28% California concentration, and less than 10 percent of the loans are seconds.

The mostly owner-occupied loans have a weighted average coupon of 7.6%, and about two-thirds are hybrid adjustable-rate mortgages with a LIBOR index, Newcastle reported. The portfolio has a weighted average FICO score of 612.

Newcastle said it funded the acquisition on a short-term basis primarily through repurchase agreement provided by an investment bank based on the one-month LIBOR + 50 basis points. Long-term funding will occur through upcoming securitizations.

"The subprime market has come under pressure as rising interest rates and a re-pricing of credit risk have lowered loan prices," said Newcastle President Kenneth M. Riis in the statement. "These market dynamics create opportunities for buyers with long-term capital to selectively take credit risk, and price that risk conservatively."

Riis said the company expects "continued disruption in the sector."

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