This week has seen several updates on the GSEs’ various loan sales, providing insights into the Enterprises’ ongoing attempts to shift credit risk into the private sector. Most prominently, the Federal Housing Finance Agency (FHFA) has released its fifth report detailing the sale of non-performing loans (NPLs) by the GSEs, Fannie Mae and Freddie Mac.
The FHFA’s latest Enterprise Non-Performing Loan Sales Report provides details about NPLs “sold through December 31, 2017, and reflects borrower outcomes as of December 31, 2017 on NPLs sold through June 30, 2017.” Through December 31, 2017, the Enterprises sold a total of 90,921 NPLs with a total unpaid principal balance (UPB) of $17.4 billion.
The report further reveals that 18,419 NPLs were sold in 2017, as compared to 44,169 in 2016. NPLs sold had an average delinquency of 3.2 years and an average current loan-to-value ratio of 95 percent. Nearly half (46 percent) of the NPLs sold came from New Jersey, New York, and Florida. The report states, “These three states accounted for 47 percent of the Enterprises' loans that were one year or more delinquent as of December 31, 2014, prior to the start of NPL program sales in 2015.”
The report also details borrower outcomes for 79,638 NPLs that were settled by June 30, 2017, and reported through December 31, 2017. “Compared to a benchmark of similarly-delinquent Enterprise NPLs that were not sold, foreclosures avoided for sold NPLs were higher than the benchmark,” the report states.
Homes occupied by borrowers had a higher rate of foreclosure avoidance outcomes, according to the report, coming in at 25.7 percent, versus 11.5 percent for vacant properties. In fact, NPLs on vacant homes had nearly double the rate of foreclosure over borrower-occupied properties (59.5 percent vs. 24 percent, respectively).
FHFA also reports that 21 percent of the GSEs' permanent modifications of NPLs provided arrearage and/or principal forgiveness, with the average forgiveness earned per loan to date standing at $51,452 (with the potential to earn an average forgiveness of $73,361).
This week, Fannie Mae also announced both its seventh sale of reperforming loans and the winner of its latest non-performing loan sale.
Fannie’s seventh sale of reperforming loans consists of approximately 27,000 loans, having a UPB of approximately $6.17 billion. This latest loan sale is being marketed in collaboration with Citigroup Global Markets, Inc. Bids are due on July 10, 2018. You can find more information or register to bid by clicking here.
Finally, Fannie also announced that MTGLQ Investors, L.P. (Goldman Sachs) were the winners of the GSE’s thirteenth non-performing loan sale, consisting of approximately 9,800 loans totaling $1.64 billion in UPB, divided among four pools. You can read more of the details by clicking here.