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For Sale: Freddie Mac’s First NPLs of 2018

Freddie Mac BHFreddie Mac [1] has announced plans to sell off a pool of $420 million nonperforming loans (NPL). The sale— which is an auction of seasoned non-performing residential whole loans held in Freddie Mac's mortgage investment portfolio—marks Freddie Mac’s first loan transaction of 2018.

According to the enterprise, the NPLs are currently serviced by Shellpoint Mortgage Servicing and will be marketed via four pools including three standard pool offerings and one extended timeline pool offering, which targets participation by smaller investors, including non-profits and minority or women-owned businesses.

J.P. Morgan Securities LLC and The Williams Capital Group, L.P., a minority-owned business are advising Freddie Mac on the sale. Bids are due from qualified bidders on March 13, 2018, for the standard pool offerings, and March 27, 2018, for the extended timeline pool. Freddie expects to settle the sales in May 2018.

“All eligible bidders, including private investors, minority or women-owned businesses, non-profits and neighborhood advocacy funds are encouraged to bid,” Freddie reported. "To participate, all potential bidders are required to be approved by Freddie Mac and must successfully complete a qualification package to access the secure data room containing information about the NPLs and to bid on the NPL pools.”

The bids are to be made on an all-or-none basis for any pool separately or for any combination of standard pool offerings together. The winning bidder will be determined on the basis of the economics of the bids, subject to meeting Freddie Mac's internal reserve levels, at Freddie Mac's sole discretion.

As of today, Freddie Mac has sold off $7 billion in nonperforming loans. The GSE has also securitized $27 billion in re-performing loans, while $9 billion was in a securitization or structured offerings.