Winners in Fannie Mae NPL Auction Announced

Fannie Mae has announced the winning bids in its first-ever bulk sale of non-performing loans, which were auctioned off in two pools in collaboration with Bank of America Merrill Lynch, Credit Suisse, and The Williams Capital Group.

The transactions, which totaled approximately 3,000 deeply delinquent residential single-family mortgage loans with about $762 million in unpaid principal balance, are expected to close in mid-June. SW Sponsor, LLC, was the winning bidder for Pool No.1 , which included 710 loans with an aggregate UPB of $173.8 million; the winning bidder for Pool No. 2, which included 2,358 loans with an aggregate UPB of $587.9 million, was Neuberger Berman Fixed Income Funds’ affiliate PRMF Acquisition LLC.

The average loan size for the two pools was $248,285 and the average delinquency of the loans was about five years, with an average broker price opinion loan-to-value ratio of 123 percent, according to Fannie Mae.

This was Fannie Mae's first sale of deeply delinquent mortgage loans as the GSEs look to clear their single-family residential mortgage portfolios of deeply delinquent loans. Fannie Mae's fellow GSE, Freddie Mac, has already conducted three bulk NPL sales 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.

"We are pleased to offer this first transaction, which will help us reduce the number of seriously delinquent loans we own while providing additional foreclosure prevention opportunities," said Joy Cianci, Fannie Mae’s SVP for Credit Portfolio Management, when Fannie Mae announced its intention to auction the loans last month. "We plan to build these sales into a programmatic offering, and look forward to working with a diverse range of potential buyers over time, including smaller investors, nonprofit organizations and minority- and women-owned businesses."

Bidders in NPL auctions must meet qualifications set forth by FHFA. In early March, FHFA issued enhanced requirements for the buyers and servicers of Agency non-performing loans that call for bidders to identify servicing partners at the time of qualification and complete a questionnaire to demonstrate a record of successful loan resolution through foreclosure alternatives. As part of the new requirements, servicers who purchase non-performing Agency loans must apply a "waterfall of resolution tactics" before resorting to foreclosure.