The U.S. Small Business Administration (SBA) recently announced that it had authorized nine loan pool originators to assemble and sell pools of 504 program first mortgage loans, through a new program, aimed at jump-starting the secondary market, authorized under the American Recovery and Reinvestment Act.

Through the program, the SBA will provide a government guarantee on the pools of portions of eligible 504 first mortgage loans assembled by authorized pool originators. The pools then will be sold to third-party investors. To be eligible, a first mortgage must be associated with a 504 loan disbursed on or after Feb. 17, 2009.

While the SBA will provide an 80 percent guarantee on the pools, lenders and the pool originators also are required to retain a stake. Lenders are required to retain at least 15 percent of each individual loan and pool originators must assume 5 percent of the risk.

The program is authorized to be in place until Feb. 16, 2011 or until $3 billion in new pools are created.

The first nine pool originators authorized are: 

•           Bank of America, N. A. of New York, New York

•           Cantor Fitzgerald & Co. of New York, New York

•           Citizens Bank of Elizabethton, Tennessee

•           Coastal Securities, Inc. of Houston, Texas

•           Community South Bank of Knoxville, Tennessee

•           Fidelity Bank of Covington, Georgia

•           Meadows Bank of Las Vegas, Nevada

•           Morgan Stanley Bank, N.A. of Salt Lake City, Utah

•           Voyager Bank of Eden Prairie, Minnesota

For additional information on the pool originators, please click here.