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Freddie Mac’s $307M Non-Performing Loan Auction

Freddie Mac

Freddie Mac announced [1] the completion of its auction of 1,789 non-performing residential first lien loans (NPLs) from its mortgage-related investments portfolio on Tuesday. The loans totaled around $307 million, and are currently serviced by NewRez LLC, doing business as Shellpoint Mortgage Servicing. The transaction is expected to settle in July 2019.

The winning bidders across the three pools include InSolve Global Credit Fund IV, L.P. for the first pool, and Elkhorn Depositor LLC for the second and third pool.

Freddie Mac’s NPL sale is part of the FHFA’s three strategic goals as conservator of the Enterprises, including maintaining foreclosure prevention activities and credit availability, reducing taxpayer risk, and building a new single-family securitization infrastructure.

As part of the Federal Housing Finance Agency’s (FHFA) effort to build a single security platform, Common Securitization Solutions, LLC along with Fannie and Freddie are to implement the Single Security Initiative on the Common Securitization Platform for both Fannie Mae and Freddie Mac in the Q2  2019. As part of this implementation Freddie Mac recently announced that its Investor Reporting Change Initiative (IRCI) will revise Single-Family investor reporting requirements, beginning in May 2019, including moving the investor reporting cycle from mid-month to end-of-month and updating remittance cycles. The FHFA's 2018 Scorecard Progress Report details [2] these major GSE activities.

Freddie Mac states that it is making the changes to promote alignment and industry standards for the Uniform Mortgage Backed Security. In March, the Federal Housing Finance Agency (FHFA) issued a final rule that requires Fannie Mae and Freddie Mac to align programs, policies, and practices that affect the cash flows of “To-Be-Announced" (TBA)-eligible Mortgage-Backed Securities. The agency statement indicated that this is a major step forward. “This rule demonstrates FHFA's commitment to the success of the UMBS, which will promote liquidity and efficiency in the secondary mortgage market," said Joseph Otting, FHFA Acting Director.