[1]Government-sponsored enterprise Freddie Mac [2] has announced that it will begin its second sale of “deeply delinquent” mortgage loans in three pools worth approximately $410 million.
Delinquent loans left over from a wave of foreclosures following the housing bust have dogged Freddie Mac and its sister GSE, Fannie Mae [3]. The conservator for both GSEs, the Federal Housing Finance Agency (FHFA [4]), is requiring the two GSEs to reduce the number of delinquent loans in their portfolios. Fannie Mae has yet to sell off any of its delinquent loans in bulk quantities.
"This transaction is consistent with Freddie Mac’s continued goal of reducing illiquid assets from its investment portfolio," Freddie Mac spokesman Thomas Fitzgerald said. "The loans involved in this transaction are deeply delinquent, including a large share that are more than two years delinquent. The sales process is a one round competitive auction."
The delinquent loans are scheduled to be auctioned off in three pools with unpaid principal balances of $160 million, $141 million, and $109 million, totaling about $410 million. Offers are due for the delinquent loans on February 4.
Freddie Mac sold its first bundle of delinquent loans for $659 million last July. The GSE owns or backs approximately $1.9 trillion worth of housing debt and held about $161 billion in mortgages as of November 30, 2014, according to Freddie Mac's November 2014 Monthly Volume Summary [5].