Freddie Mac announced on Wednesday its largest sale ever of deeply delinquent, non-performing loans from its mortgage investment portfolio, consisting of 5,208 loans serviced by Ocwen Financial with an unpaid principal balance (UPB) of approximately $1.1 billion.
The sale was completed five days before the announcement (on September 11) and the transaction is expected to settle in October 2015. The sale is part of Freddie Mac's Standard Pool Offerings (SPOs).
The loans offered were delinquent by an average of three and a half years, meaning that the borrowers were likely previously evaluated for loss mitigation options or in some stage of loss mitigation or foreclosure, according to Freddie Mac. Approximately 33 percent of the aggregate pool balance consisted of loans that were modified and later became delinquent. The aggregate pool has a loan-to-value ratio of approximately 91.1 based on broker price opinion and is geographically diverse, according to Freddie Mac.
The loans in this sale were offered in five different pools. The winners were as follows:
Freddie Mac began marketing the transaction through its advisors on August 13 to potential bidders. As always, Freddie Mac encouraged participation from minority- and women-owned businesses (MWOBs), non-profits, neighborhood advocacy funds, and private investors in the bidding for this NPL sale. Advisors for the transaction were Credit Suisse, Wells Fargo Securities and First Financial Network, a woman-owned business.
The FHFA, Freddie Mac's conservator, requires all bidders to comply with the Agency'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.
Freddie Mac's last SPO sale of non-performing loans, which was completed on July 28, was comprised of 3,577 deeply delinquent loans with $591 million in UPB.