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A Practical Framework for Evaluating and Executing Secondary Market Sales of Repurchased Residential Mortgage Loans.
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Overview

Repurchased loans are often viewed as stranded assets. In many cases, however, a structured secondary market strategy can reduce balance sheet exposure and recover meaningful value.

Every repurchased loan has unique characteristics. The objective is not simply to sell the asset, but to determine the execution strategy and buyer profile most likely to achieve the strongest market outcome.

The framework below outlines the approach Richter Management Group has used since 2007 to evaluate and facilitate secondary market sales of repurchased and other challenged residential mortgage loans.

1. Portfolio Segmentation

Each loan is evaluated based on characteristics that influence buyer interest and execution strategy, including:

• Performing and near-performing loans

• Early-stage delinquent loans
  

• Non-performing loans
  

• Scratch & Dent loans
  

• Collateral characteristics
  

• Documentation quality
  

• Geographic concentration
  

Understanding these characteristics is the first step in determining the most appropriate execution strategy and buyer universe

2. Buyer Alignment

Different buyers pursue different opportunities.

Rather than presenting every asset to the same audience, each loan or portfolio is matched with buyers whose investment criteria align with the asset's characteristics.

Examples include:

• Scratch & Dent Buyers — Loans with documentation exceptions, underwriting defects, or prior performance issues.
  

• Re-Performing Loan Buyers — Assets demonstrating payment stability following delinquency.
  

• Non-Performing Loan Buyers — Seriously delinquent or charged-off loans.
  

• Regional Buyers — Investors focused on specific geographic markets or collateral concentrations.
  

Matching the asset to the appropriate buyer universe can materially influence both market interest and execution.

3. Resale Execution

Execution strategy is determined by the characteristics of the asset—not a one-size-fits-all process.

Pooled Sales

Loans are grouped when appropriate to improve marketing efficiency, increase buyer participation, and optimize execution.

One-Off Sales

Individual placements are often the preferred approach for unique assets, smaller opportunities, or loans requiring targeted buyer outreach.

What This Is Not

This framework does not include:

• Loan modification

• Defect remediation
  

• Servicing activities
  

• Documentation repair
  

• Asset repositioning
  

The focus is solely on facilitating a compliant, market-driven secondary market exit through direct resale.

Why It Matters

No two repurchased loans are identical.

Differences in performance history, documentation, collateral characteristics, and geography can significantly influence buyer appetite and market value.

A structured evaluation process helps identify the execution strategy most appropriate for each asset and provides access to buyers whose investment objectives align with the opportunity.

Richter Management Group

Richter Management Group has specialized in secondary market sales of residential mortgage loans since 2007.

Areas of focus include:

• Repurchased Loans

• Scratch & Dent Loans
  

• Re-Performing Loans
  

• Non-Performing Loans
  

• Individual Loan Sales
  

• Portfolio Transactions
  

Let's Compare Notes

If you're evaluating a repurchased loan—or simply want to discuss current buyer appetite—I'd be happy to compare notes.

Secondary Market Execution Framework

A practical approach to evaluating and executing secondary market sales of repurchased residential mortgage loans.

Rich Graves
Richter Management Group

831.233.1626
richgraves@richtermanagementgroup.com

Every transaction is unique. Buyer interest, pricing, and execution strategies vary based on loan characteristics
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