Freddie Mac [1] has announced that it has made yet another non-performing loan (NPL) sale [2] via auction as part of its initiative to rid its mortgage-related investments portfolio of deeply delinquent mortgage loans.
The transaction includes 2,879 deeply delinquent single-family residential mortgage loans with an aggregate unpaid principal balance (UPB) of $706 million. The loans are serviced by Bayview Loan Servicing and the servicing will be transferred post-settlement. The transaction is expected to settle in August 2016, according to Freddie Mac.
Freddie Mac began marketing the transaction to potential bidders on May 25, 2016. The potential bidders to which the transaction was marketed included minority- and women-owned businesses, non-profits, and neighborhood advocacy funds as well as private investors, according to Freddie Mac.
The breakdown of the five pools and the winning bidders is as follows:
Three of the pools were geographically diverse, and one pool was concentrated in New York and the other in New Jersey. The loans sold were on average nearly five years delinquent.
“Given the deep delinquency status of the loans, the borrowers have likely been evaluated previously for or are already in various stages of loss mitigation, including modification or other alternatives to foreclosure, or are in foreclosure,” Freddie Mac stated in its report.
About 29 percent of the aggregate pool balance contained loans that were previously modified and subsequently became delinquent. The LTV ratio of the aggregate pool, based on broker price opinion, is about 92 percent.
Freddie Mac has sold approximately $4.3 billion [3] in non-performing single-family residential mortgage loans since the first pilot sale in August 2014. Freddie Mac’s regulator, the Federal Housing Finance Agency (FHFA), announced enhanced requirements [4] in April 2016 for NPL sales, which FHFA says are focused on achieving the best borrower outcomes.