[1]Bank of America [2] is offering five pools of residential mortgage loans for sale totaling $1.2 billion that range in status from current to modified to non-performing, according to multiple media reports [3] on Friday.
Citing a "person with knowledge of the matter," Bloomberg reported [3] that although some of the loans being offered are current, most are in some stage of delinquency. According to the report, Bank of America is servicing four of the pools and Ocwen is servicing the other.
Bank of America spokesman Dan Frahm would not confirm or deny that the bank was offering the loans for sale, stating that the bank didn't comment on "market rumor or speculation." A spokesman from Ocwen did not immediately respond to a request for comment.
The loans being offered for sale by Bank of America are the latest in a series of sales lenders have offered this year in an attempt to remove non-performing loans from their portfolios and at the same time meet investor demand for distressed real estate as foreclosure inventory continues to shrink. According to Mission Capital Advisors [4], banks that are trying to build more capital and that are facing stricter regulations have sold or offered $18 billion worth of defaulted residential mortgage loans in 2015 alone. That number is slightly ahead of last year's pace, when banks sold $32 billion worth of defaulted residential mortgage loans, according to Mission.
The private market is not the only place where NPL sales are taking place. In the secondary market, Fannie Mae and Freddie Mac have executed several NPL sales in the last year. Freddie Mac, in five of its Standard Pool offerings combined, has sold about $2.76 billion [5] worth of deeply delinquent single-family residential mortgage loans since July 2014. Fannie Mae sold its first-ever bundle of non-performing loans in May 2015, worth $762 million, and announced its second such sale in late July [6] on a bundle of NPLs worth $788 million.