KKR Financial Holdings LLC -- a former real estate investment trust that is attempting to liquidate its residential mortgage assets -- said it lost $40 million selling off $5.1 billion in residential mortgage loans and could lose its entire $200 million stake in its remaining mortgage-backed securities. The recent sale of $5.1 billion in residential mortgage loans and related interest-rate swaps left the San Francisco-based company with $5.8 billion in mortgage loans, mostly in the form of residential mortgage backed securities (MBS). Those securities are financed primarily by non-recourse, asset-backed secured liquidity note facilities, with the company's equity in those notes totaling $200 million. In a Securities and Exchange Commission filling, KKR said it could lose all of that money -- and up to $50 million more -- because of "unprecedented disruption in the residential mortgage and global commercial paper markets." Although KKR has initiated discussions with invest...
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