Breaking Down Non-Performing Loan Sales

The Federal Housing Finance Agency (FHFA) this week released the latest Enterprise Non-Performing Loan Sales Report, detailing the sales of non-performing loans (NPL) by Fannie Mae and Freddie Mac through June 30, 2017. The report also covers borrower outcomes as of that same date, on NPLs sold through December 31, 2016. According to the report, “through June 30, 2017, the Enterprises sold 82,359 NPLs representing a total unpaid principal balance (UPB) of $16 billion.”

NPLs sold by the GSEs had an average delinquency of 3.3 years and an average current loan-to-value ratio of 97 percent. Nearly half (47 percent) of the NPLs sold were located in three states: New Jersey, New York, and Florida. The report adds, “These three states also accounted for 47 percent of the Enterprises' loans that were one year or more delinquent as of December 31, 2014.”

Community Loan Fund of New Jersey (CLFNJ), a nonprofit organization, won the bid for 10 of 12 “small, geographically concentrated NPL pools” sold during the period.

The report also provides insights about the 69,804 NPLs that were settled by December 31, 2016. NPLs on occupied homes were much more likely to avoid foreclosure than those on vacant homes—21.2 percent versus 9.9 percent, respectively. In fact, the foreclosure rate on vacant homes (47.8 percent) was nearly double that of borrower-occupied homes (19.3 percent).

NPLs sold by the GSEs also had a higher foreclosure avoidance rate than those not sold. According to the FHFA report, “Thirty‐six percent of NPLs that have been with the new servicers the longest (1,737 NPLs with new servicers for 26 months) avoided foreclosure, compared to 24 percent of the benchmark NPLs.”

Finally, the the average forgiveness earned per loan to date on NPLs with permanent modifications was $30,443, with the potential to earn an average forgiveness of $60,586.

You can read the full FHFA Enterprise Non-Performing Loan Sales Report by clicking here.