Freddie Mac recently announced an approximate $363 million non-performing loan (NPL) transaction, an auction of seasoned non-performing residential first lien whole loans held in Freddie Mac’s mortgage-related investments portfolio.
The NPLs are being marketed via four pools: three Standard Pool Offerings (SPO) and one Extended Timeline Pool Offering (ETPO), which the GSE notes targets participation by smaller investors, including non-profits and Minority, Women, Disabled, LGBT, Veteran or Service-Disabled Veteran-Owned Businesses. SPO pools are generally large, geographically diverse pools, although they may be geographically concentrated. ETPO pools are generally smaller in size, and may or may not be geographically concentrated. The marketing period will be approximately two weeks longer than the typical marketing period for SPOs.
Freddie Mac states that bids on these pools are due from qualified bidders by May 7, 2019 for the SPO pools, and May 21, 2019 for the EXPO pool. The sales are expected to settle in July 2019.
Potential bidders must be approved by Freddie Mac and must successfully complete a qualification package to access the secure data room containing information about the NPLs and to bid on the NPL pool(s). The bids are to be made on an all-or-none basis for any pool separately or for any combination of SPO pools together. The winning bidder will be determined on the basis of the economics of the bids, subject to meeting Freddie Mac’s internal reserve levels, at Freddie Mac’s sole discretion.
In order to qualify for access to the secure data room containing information about the NPLs, potential bidders must possess a signed Non-Disclosure Agreement, proof of adequate funds, a complete Servicer Due Diligence Questionnaire, and attestation that the bidder is is not currently disbarred or suspended from doing business by any federal, state or local government agency, and that bidder has adequate experience managing a portfolio of single-family mortgage loans or securities.
Bank of America Merrill Lynch, and First Financial Network, Inc., a woman-owned business, serve as Freddie Mac’s advisors on the transaction. Find out how to become a bidder here.