Pepper Home Loans has acquired a portfolio of residential mortgages worth $109m.
Pepper, itself purchased by a consortium of investors earlier this week, acquired the loans from Permanent Custodians, the trustee of First Permanent Securities Mortgage Warehouse Trust. The loans were originated by First Permanent Financial Services which ceased originating new loans in May 2008.
Pepper's managing director and chief executive, Patrick Tuttle, called the purchase a "milestone transaction". He also emphasised the strength of the portfolio, which is entirely made up of high loan-to-value ratio loans, calling it one of the "best underwritten loan books in the country."
The total loan portfolio held within the acquired FP Warehouse Trust as at 31 May 2010 was $69m. In addition, Pepper acquired the First Permanent Super Prime RMBS Trust, worth $40m. It intends to exercise its call option over the FP RMBS Trust on 6 July 2010, bringing the portfolio value to $109m.
Tuttle hinted at the likelihood of further acquisitions in future, saying that "Pepper will continue to explore opportunities to acquire loan and other asset portfolios which complement our credit, third-party servicing and debt capital markets skills".