Freddie Mac [1] announced a $1.1 billion non-performing loan transaction, an auction of seasoned non-performing residential whole loans held in Freddie Mac's mortgage investment portfolio, according to a recent report from the GSE. The non-performing loans are currently serviced by either Wells Fargo Bank, N.A. or Ditech Financial LLC.
The report says that the non-performing loans are being marketed via five pools. These pools include four Standard Pool Offerings as well as one Extended Timeline Pool Offering which targets participation by smaller investors, including non-profits and minority and women-owned businesses.
Freddie Mac states that the bids are due from qualified bidders by September 29, 2016 for the Standard Pool Offerings, and the bids are due by October 13, 2016 for the Extended Timeline Pool Offering. Freddie Mac says that these sales are expected to settle in December 2016.
Freddie Mac makes note that all eligible bidders, including private investors, minority and women-owned businesses, non-profits and neighborhood advocacy funds are encouraged to bid. The also share that the winning bidder will be determined on the basis of economics, subject to meeting Freddie Mac's internal reserve levels. The GSE also says that in order to participate, all potential bidders are required to be approved by Freddie Mac to access the secure data room containing information about the non-performing loans and to be able to bid on the non-performing loan pool.
Advisors to Freddie Mac on this transaction are Wells Fargo Securities, LLC as well as First Financial Network, Inc., which is a woman-owned business.
Through the first half of 2016, Freddie Mac reports that it has sold $5.3 billion in non-performing loans as part of its strategy to reduce the less liquid assets in its mortgage investment portfolio. Requirements guiding the servicing of these transactions are focused on improving borrower outcomes and stabilizing communities. Additionally, Freddie Mac notes that in April 2016, Freddie Mac's regulator, the Federal Housing Finance Agency, announced enhanced requirements for non-performing loan sales.