As part of a continued effort to clear its mortgage portfolio of non-performing loans, Freddie Mac [1] has announced [2] it will auction off a single pool of single-family residential non-performing loans (NPLs) with $233 million in unpaid principal balance (UPB) as part of a Standard Pool Offering.
The loans being offered in the pool are deeply delinquent and are geographically diverse. All the loans in the pool are currently being serviced by Ocwen Financial. Bids are due from qualified bidders for the pool on May 20 and the sale is expected to settle sometime in July.
Freddie Mac is encouraging private investors, minority- and women-owned businesses, non-profits, and neighborhood advocacy funds to bid in the auction. Potential bidders must be approved by Freddie Mac to gain access to the secure data room that contains information about the NPLs in order to bid in the auction. The winning bidder must meet Freddie Mac's reserve levels and will be determined on the basis of economics.
Advisors for the transaction are Bank of America Merrill Lynch, Wells Fargo Securities, LLC and CastleOak Securities, L.P. Click here for more information [3] about Freddie Mac's NPL sales.
Earlier this month, Freddie Mac announced the upcoming auction [4] of its first-ever Extended Timeline Pool Offering (EXPO), meant to target smaller investors by offering NPLs for sale in smaller pools with extended timelines. Freddie Mac's first EXPO includes a pool of loans located in Miami-Dade County, Florida, with a UPB of approximately $35 million, and bids are due on June 2.
Freddie Mac has already conducted three Standard Pool Offering NPL sales [5] in the last eight months totaling approximately $1.97 billion in UPB. The last such sale by Freddie Mac, completed on March 25, was its largest bulk NPL sale ever – it included nearly 5,400 loans totaling $985 million in UPB. Freddie Mac's fellow GSE, Fannie Mae [6], announced the marketing [7] of its first-ever bulk NPL sale on April 8, consisting of about 3,200 NPLs totaling $786 million in aggregate UPB.