Three of the nation's largest mortgage lenders have put sizable packages of nonperforming and reperforming mortgage loans on the market for investors to buy, according to New York-based loan broker Mission Capital Advisors.
First reported by Bloomberg, the loans are worth a combined $4.5 billion, Mission Capital said. Bank of America has put up approximately $2.56 billion worth of delinquent debt for sale, including nonperforming loans, reperforming mortgages (those in which the borrower was 90 days or more behind but has resumed making payments), and home equity lines of credit (HELOCs), according to Mission Capital. Citigroup has put up $1.8 billion worth of reperforming mortgages for sale, and JPMorgan Chase is looking for a buyer for $143 million worth of nonperforming mortgage loans, Mission Capital said. The sale was first reported by Bloomberg News.
According to Mission Capital, there has been an increased demand for delinquent mortgage loans, troubled debt, and nonperforming mortgages among hedge fund investors and private equity firms. Last month, Freddie Mac announced that it intended to sell $410 million worth of delinquent mortgage loans. But there has been so much of a demand that the suppliers cannot keep up, Mission Capital said.
"The supply has yet to meet the demand that’s out there," Mission Capital managing director Luis Vergara said. "A lot of capital has been set aside to invest in residential product."
Spokespeople from Citi and JPMorgan Chase declined to comment on the sale of the delinquent or nonperforming loans. A spokesperson from Bank of America said the bank did not comment on "market rumors."
Data compiled by Mission Capital shows that about $4.2 billion worth of nonperforming loans and $3.2 billion worth of modified or reperforming loans have traded or been put up for sale so far this year.