February 5, 2010 / 8:24 PM / 9 years ago

UPDATE 1-Select Portfolio wins Thornburg's $11 bln portfolio

* Select Portfolio Servicing named as winning bidder

* Select Portfolio is unit of Credit Suisse

* PennyMac named as back-up bidder

* Sale hearing set for Feb. 10, deal to close by Feb. 26

By Emily Chasan

NEW YORK, Feb 5 (Reuters) - Bankrupt U.S. mortgage lender Thornburg Mortgage Inc THMRQ.PK will seek court approval next week to sell its $11 billion mortgage servicing portfolio to Credit Suisse’s Select Portfolio Servicing Inc, according to a regulatory filing on Friday.

Thornburg, which filed for bankruptcy last May and has been run by a court-appointed trustee since October, said in a U.S. Securities and Exchange Commission filing on Friday that the trustee has chosen Select Portfolio as the winner of a sealed-bid auction for the company’s prized mortgage servicing portfolio.

Select Portfolio, has agreed to pay a purchase price of about 0.77 percent of the unpaid principal balance of the mortgage loans in the portfolio, or for a cash purchase price of under $100 million.

Thornburg, which focused primarily on jumbo and super-jumbo adjustable-rate and hybrid mortgages, has been servicing its portfolio since it filed for bankruptcy protection, but has not been making new loans.

Select Portfolio, one of the largest U.S. subprime mortgage servicers, is owned by Credit Suisse Group AG CSGN.VX and based in Salt Lake City, Utah, according to its website.

The Thornburg portfolio had attracted wide interest at auction, as the company was one of the biggest casualties of the subprime housing crisis. Its portfolio was seen as more attractive than similar offerings from agencies like Fannie Mae FNM.N and Freddie Mac FRE.N because Thornburg was a private investor. [ID:nN04212654]

The sale is subject to court approval at a Feb. 10 hearing in bankruptcy court in Baltimore and the sale is expected to close by Feb. 26, according to the filing from Thornburg. Thornburg now goes by the name TMST Inc.

The trustee selected PennyMac Corp. as the back-up bidder for the portfolio if for some reason Select Portfolio cannot close the sale. According to court papers, PennyMac (PMT.N) submitted the second-highest offer for the portfolio, which holds some 16,998 loans.

In December, a U.S. bankruptcy judge signed an order allowing the expedited sale of the portfolio to go forward. [ID:nN18232206]

Interactive Mortgage Advisors is acting as the broker on the deal.

The case is In re TMST Inc, U.S. Bankruptcy Court, District of Maryland, No. 09-17787. (Reporting by Emily Chasan; additional reporting by Santosh Nadgir in Bangalore; Editing by Gary Hill)

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