Fannie Mae plans to market more deeply delinquent, non-performing loans (NPLs) to non-profits, smaller investors, and minority- and women-owned businesses.
According to a recent announcement from Fannie Mae, the GSE plans to sell its fourth Community Impact Pool, which is a smaller pool of geographically-focused, high occupancy loans marketed specifically for participation for the aforementioned groups. New Jersey Community Capital, a non-profit Community Development Financial Institution, has won all three previous Community Impact Pools.
The newest Community Impact Pool for sale contains approximately 90 loans focused in the Miami, Florida, area, totaling about $20.1 million in unpaid principal balance (UPB). It is one of three pools of NPLs Fannie Mae is offering for sale via auction. The two larger pools contain a combined total of about 3,300 single-family residential mortgage loans with about $526.1 million in UPB.
“We continue to strive to help struggling homeowners and neighborhoods recover,” said Joy Cianci, Fannie Mae’s SVP, Single-Family Credit Portfolio Management. “Today’s announcement of our non-performing loan sale furthers this commitment by expanding the opportunities available for borrowers to avoid foreclosure.”
“We continue to strive to help struggling homeowners and neighborhoods recover.”
Joy Cianci, Fannie Mae
According to Fannie Mae, bids are due for the two larger pools on July 7 and for the Community Impact Pool on July 21. This will be Fannie Mae’s sixth NPL sale overall since the first one in April 2015.
For the last year or so, FHFA and HUD have come under fire from housing advocacy groups and some lawmakers for selling deeply delinquent mortgages, which are generally three to five years delinquent on average, to Wall Street and private investors. Critics of the NPL sales say that Wall Street and private investors are concerned only with profiting off of foreclosures rather than achieving the best outcomes for borrowers.
Both FHFA and HUD, however, have made several enhancements to their requirements for NPL transactions that are designed to help borrowers achieve the best outcomes. Among the terms of Fannie Mae’s NPL transactions are requiring the owner of the loan to market the property exclusively to owner-occupants and non-profits when foreclosure cannot be prevented before selling it to investors.