On Wednesday, Fannie Mae [1] announced its fifth sale of reperforming loans as part of the company’s ongoing effort to reduce the size of its retained mortgage portfolio.
According to the enterprise, the sale consists of about "9,900 loans, having an unpaid principal balance of approximately $2.2 billion," and is available for purchase by qualified bidders.
The terms of Fannie Mae's reperforming loan sale require the buyer to offer loss mitigation options designed to be sustainable to any borrower who may re-default within five years following the reperforming loan sale, according to the release [2].
In addition, the release notes that buyers must report on loss mitigation outcomes. Any reporting requirements "cease once a loan has been current for twelve consecutive months after the closing of the reperforming loan sale."
Fannie Mae noted that selling non-performing loans are intended to reduce the number of “seriously-delinquent loans” that Fannie Mae owns in an effort to “stabilize neighborhoods and to help meet the portfolio reduction targets required under the Senior Preferred Stock Purchase Agreement with the United States Treasury.”
The sales of non-performance loans were enacted as a part of the Federal Housing Finance Agency’s 2015 Conservatorship Scorecard. Back in March of 2015 [3], the Federal Housing Finance Agency (FHFA) announced guidelines [4] for these sales to encourage broad buyer participation and provide safeguards for borrowers.
This sale of reperforming loans is being marketed in collaboration with Citigroup Global Markets, Inc. Bids are due on November 6, 2017. Interested bidders can register for announcements, training, and other information by clicking here [5].