[1]Freddie Mac [2] is selling three pools of non-performing residential home loans with an unpaid principal balance of $1 billion, according to a report [3]from Bloomberg.
The loans will reportedly be sold in three pools totaling $660 million, $249 million, and $125 million. According to the report, the homes sold in the smallest pool are all in New York while the homes related to the two larger pools are dispersed nationwide. Offers are due for the loans on March 24, according to Mission Capital Advisors.
"The loans involved in this transaction are deeply delinquent, including a large share that are more than two years delinquent," said Thomas Fitzgerald, a spokesman for Freddie Mac, in an email to DS News. "The sales process is a one round competitive auction."
Freddie Mac's conservator, the Federal Housing Finance Agency (FHFA [4]), is requiring Freddie Mac and its fellow GSE, Fannie Mae [5], to reduce the number of non-performing residential loans in their portfolios. This will be Freddie Mac's third sale of nonperforming loans since last summer; the latest $1 billion offering is Freddie Mac's largest of the three. In August, the Enterprise sold a bundle of NPLs totaling $596 million and one in February that covered $392 in UPB. Sales of NPLs by the two Enterprises generally include loans that are seriously delinquent, which are those that are 90 days or more past due. In many cases, the seriously delinquent loans in the GSE portfolios are more than a year overdue. The 1,975 NPLs sold in the February sale [6] were an average of three years delinquent on mortgage payments, meaning that most of them were likely in some stage of mitigation, according to Freddie Mac.
In early March, the FHFA enacted enhanced requirements [7] for the buyers and servicers of Agency non-performing loans. Among other requirements, bidders must identify servicing partners at the time of qualification and complete a questionnaire to demonstrate a record of successful loan resolution through foreclosure alternatives. Servicers who purchase non-performing Agency loans must apply a "waterfall of resolution tactics" before resorting to foreclosure and report loan resolution results and borrower outcomes to Fannie Mae and Freddie Mac for four years after the NPL sale.