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Freddie Mac to Auction $1.2 Billion Worth of Deeply Delinquent NPLs

freddie-mac-twoFreddie Mac announced Thursday it will be auctioning a Standard Pool Offering (SPO) of non-performing loans (NPLs) from its mortgage investment portfolio with $1.2 billion in aggregate unpaid principal balance (UPB).

The NPLs in this transaction are being serviced by Ocwen Financial, according to Freddie Mac. The loans are deeply delinquent, which means in many cases they are delinquent by two years or more and are likely either in foreclosure or some stage of loss mitigation.

The loans for this transaction are being marketed as five geographically diverse pools and offered for sale via auction, according to Freddie Mac. All eligible bidders are encouraged to bid, including private investors, minority and women-owned businesses (MWOBs), non-profits, and neighborhood advocacy funds. Bidders must be approved by Freddie Mac in order to access the data room containing secure information about the NPLs and in order to bid in the auction. Winners will be determined on the basis of economics, subject to meeting Freddie Mac's internal reserve levels, according to Freddie Mac.

All bidders must comply with the Federal Housing Finance Agency (FHFA)'s enhanced requirements for NPL sales announced on March 2, which include approval by and good standing with government housing agencies (Freddie Mac, Fannie Mae, Ginnie Mae, and the Federal Housing Administration); evaluating borrowers for eligibility in the government's Home Affordable Modification Program (HAMP); and applying a "waterfall" of resolution tactics before resorting to foreclosure.

Bids are due from qualified bidders on September 9, and the sale is expected to settle in October. According to Freddie Mac, advisors for the transaction will be Credit Suisse Securities, Wells Fargo Securities, and First Financial Network, a woman-owned business.

The NPLs are being marketed as five geographically diversified pools and are offered via an auction process. Bids are due from qualified bidders on September 9, 2015. The sale is expected to settle in October 2015.

This transaction is Freddie Mac's sixth NPL transaction of 2015 and seventh overall since July 2014; six of those have been Standard Pool Offerings and the other was an Extended Pool Offering. The previous five SPO NPL transactions totaled approximately $2.76 billion in UPB. The last one, which was completed on July 28, was comprised of 3,577 deeply delinquent loans with $591 million in UPB.

For more information about Freddie Mac's NPL sales, click here.

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
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