Non-Performing GSE Loans Totaled $29B as of Year-End

The Federal Housing Finance Agency (FHFA) has released its latest report on the sale of non-performing loans (NPLs) by Government Sponsored Enterprises Fannie Mae and Freddie Mac (the GSEs). 

The latest edition of the Enterprise Non-Performing Loan Sales Report includes sales information on all NPLs sold through the end of 2021. However, borrower outcomes reflect NPLs sold through June 30, 2021. 

The sale of these loans reduces the number of delinquent loans in the GSEs portfolio which transfers risk to the private sector. The FHFA and the GSEs impose requirements on NPL buyers designed to achieve more favorable outcomes for borrowers than foreclosure. 

All-in-all, the GSEs sold off 154,927 NPLs with a total balance of $28.7 billion from the beginning of 2014 to the end of 2021. The loans designated NPLs had an average delinquency of 2.8 years and an average current loan-to-value ratio of 86%. 

Highlights from the NPL sales portion of the report include: 

• The average delinquency for pools sold ranged from 1.1 years to 6.2 years. 
• Fannie Mae has sold 104,467 loans with an aggregate UPB of $19.0 billion, an average delinquency of 2.8 years, and an average LTV of 84 percent. 
• Freddie Mac has sold 50,505 loans with an aggregate UPB of $9.7 billion, an average delinquency of 2.7 years, and an average LTV of 90 percent. 
• NPLs in New Jersey, New York, and Florida represent 41 percent of the NPLs sold. 

Highlights from the borrower outcome portion of the report include: 

• The borrower outcomes in the report are based on 128,087 NPLs that were settled by June 30, 2021, and reported as of December 31, 2021. 
• Compared to a benchmark of similarly delinquent Enterprise NPLs that were not sold, foreclosures avoided for sold NPLs were higher than the benchmark. 
• NPLs on homes occupied by borrowers had the highest rate of foreclosure avoidance outcomes (42.3 percent foreclosure avoided versus 17.1 percent for vacant properties). 
• NPLs on vacant homes had a much higher rate of foreclosure, more than double the foreclosure rate of borrower-occupied properties (77.9 percent foreclosure versus 33.7 percent for borrower occupied properties). Foreclosures on vacant homes typically improve neighborhood stability and reduce blight as the homes are sold or rented to new occupants. 
• The average UPB of NPLs sold was $185,292. 

Click here to view the 51-page report in its entirety.