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LAS VEGAS-Compass Partners, a private equity firm from New York City, has closed on its acquisition of the assets of locally based USA Commercial Mortgage Co.’s First Trust Deed Fund. Compass’ $67-million offer was the high bid at a bankruptcy court auction held in December.

The fund took in $85 million with which it made short-term loans for commercial real estate projects. The portfolio of loans has an aggregate unpaid principal balance of $1 billion. Approximately 60% of the loans are non-performing.

Rather than liquidate the assets, Compass has formed Compass Financial Partners LLC to service the loans. Compass co-founder David Blatt tells GlobeSt.com that all of the loans are backed by real estate assets located all over the country. He expects to stabilize and resolve the outstanding loans in six to 12 months.

“A lot of the loans are associated with land development, good projects with good developers,” he says. “A lot of these loans are in default just because of the servicer; nobody was home at the servicer to approve refinances or to release liens. That’s what we’ve acquired. Now we have to get in there and correct things, and then we will use the platform to expand.”

Compass Partners acquires and services distressed mortgage loans. The aforementioned expansion will take the company into bridge lending. The company is currently working with its new base of borrowers from the USACM portfolio for immediate refinancing matters. When the portfolio is stabilized, the company plans to entertain additional bridge lending opportunities.

USA Commercial Mortgage Co. and some of its affiliates filed voluntary petitions for reorganization in April 2006 under Chapter 11 with the US Bankruptcy Court for the Southern District of Nevada. The company also does business under the name USA Capital.

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