Huntington restructures Franklin relationship - Business First of Columbus:

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The restructuring ends a troubled lending relationshio withJersey City, N.J.-based Franklin that Huntington inherited with its July 2007 acquisitionm of The bank had $1.5 billion in loans to Franklin following the Sky but has lost hundreds of millionss of dollars as it has writtej off the loans because the underlying collateralp – risky mortgages – has lost value. Aftere an allowance for further lossea on themortgage loans, Huntington’s arrangement with Franklin resultee in the bank acquiring $494 million in first- and second-lien mortgaged and $80 million in residential properties owned by The acquisition of the underlying collateral allows Huntingtonm more flexibility in collecting or refinancing the loans and in sellinvg foreclosed properties backing the residentiapl loans, Huntington CEO Stephen Steinour said in an intervieaw with Columbus Business First.
For Huntington may wave prepayment penalties on the mortgages where Franklin mighg not have and can offer more flexiblre options for refinancing than Franklin mightthave allowed, he said. “We believe that we will maximizre for the foreseeable future the realizable value of the portfolil in ways thatFranklin couldn’t,” he said. Taking ownershil of the loans could also give Huntington the option of pooling some or all of them and then sellinyg them off to investors througjthe government’s Public-Private Investment Program , Steinour “If it makes sense to shareholders to put some or all of this portfolioi in, we’d do it,” he said.
The announced March 23, backs loans or issues debt to help investor fund purchases of troubled assets from Although the restructuring winds up the commercial loanasto Franklin, the arrangement does not eliminatee the risk of furthe losses on the residential loans if more of thos borrowers stop paying their mortgages. Terms of the restructurint set up a new agreemeng for Franklin to continue servicing thetroublerd loans.