[1]Fannie Mae [2] announced on Thursday [3] that it will begin offering up for sale pools of non-performing single-family mortgage loans to interested buyers in an effort to clear out deeply delinquent loans from its portfolio.
The GSE said in the announcement that it will be targeting non-profit organizations, smaller investors, and minority- and women-owned businesses for some of the NPL purchases.
"These transactions are intended to reduce the number of seriously delinquent loans that Fannie Mae owns, to help stabilize neighborhoods, and to offer borrowers access to additional foreclosure prevention options,” said Joy Cianci, Fannie Mae’s SVP for Credit Portfolio Management. "Our goal is to market these loans to a diverse range of buyers. We look forward to building these sales into a regular, programmatic offering to the market."
Buyers who are interested in purchasing the NPLs from Fannie Mae can register for ongoing announcements, training, and other information at this site [4]. Information about specific pools of loans for sale will also be available on that site.
Fannie Mae's conservator, the Federal Housing Finance Agency (FHFA [5]), is requiring Fannie Mae and its fellow GSE, Freddie Mac [6], to reduce the number of non-performing residential loans in their portfolios. Fannie Mae has yet to conduct an large-scale NPL sale, while Freddie Mac has sold three bundles of NPLs in the last eight months totaling nearly $2 billion in aggregate unpaid principal balance (UPB). The last such sale [7], conducted in late March, featured three pools consisting of about 5,400 NPLs with an aggregate UPB of $985 million – Freddie Mac's largest NPL sale ever. Most of the NPLs sold by Freddie Mac were deeply delinquent – some by as many as two to three years, meaning the borrower was likely either in foreclosure or some stage of mitigation.
In early March, the FHFA enacted enhanced requirements [8] 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.