Doral Sells Mortgages to First BanCorp for $193M in Cash

Doral Financial in San Juan, Puerto Rico, continues to shed assets.

The $7.8 billion-asset company disclosed in a regulatory filing Friday that it had sold performing mortgages with outstanding balances of roughly $193 million to First BanCorp, also in San Juan. First BanCorp also bought about $47,000 of other receivables, including property taxes and insurance premiums, tied to the loans in a deal that closed Thursday.

First BanCorp paid about $193 million in cash for the mortgages. First BanCorp has 90 days to analyze the loans and notify Doral if any of the mortgages fail to conform with representations under the purchase agreement, with an $8 million cap. Doral can choose to cure any defective mortgage, repurchase the loan or provide First BanCorp with a substitute mortgage of equal or greater value.

Doral said it will continue to service the mortgages for an interim period.

Doral, which is facing increased pressure from the Federal Deposit Insurance Corp. to provide a written capital restoration and capital plans, has been busy selling assets. The company, deemed "significantly undercapitalized" by the FDIC, recently sold loans and real estate properties to Abbey Finance Holdings in a move that lowered capital levels but boosted liquidity.

Doral is embroiled in a legal battle with Puerto Rico's Treasury Department over claims Doral is owed $230 million in overpaid taxes. A ruling on that issue is expected in coming weeks.