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Freddie Mac has announced it sold 3,564 non-performing residential first lien loans (NPLs) via auction from its mortgage-related investments portfolio.
The loans, with a balance of approximately $586 million, are currently serviced by Specialized Loan Servicing LLC, Select Portfolio Servicing, Inc., NewRez LLC, d/b/a Shellpoint Mortgage Servicing and Nationstar Mortgage LLC d/b/a RightPath Servicing. The transaction is expected to settle in November 2023 as part of Freddie Mac’s Standard Pool Offerings (SPO).
Freddie Mac, through its advisors, began marketing the transaction on August 28, 2023 to potential bidders, including non-profits and Minority, Women, Disabled, LGBT, Veteran or Service-Disabled Veteran-Owned Businesses (MWDOBs), neighborhood advocacy organizations and private investors active in the NPL market. Bids for the upcoming Extended Timeline Pool Offering (EXPO), which is a smaller sized pool of loans, are due from qualified bidders by October 19, 2023.
For the SPO offerings, the loans were offered as two separate pools of mortgage loans. The two pools consist of mortgage loans secured by geographically diverse properties. Investors had the flexibility to bid on each pool individually and/or any combination of pools.
Given the delinquency status of the loans, the borrowers have likely been evaluated previously for loss mitigation, including modification or other alternatives to foreclosure, or are in foreclosure. Mortgages that were previously modified and subsequently became delinquent comprise approximately 53% of the aggregate pool balance. Additionally, purchasers are required to honor the terms of existing loss mitigation agreements and solicit distressed borrowers for additional assistance except in limited cases and ensure all pending loss mitigation actions are completed.
The SPO pools and winning bidders are summarized below:
Advisors to Freddie Mac on the transaction were Wells Fargo Securities, LLC and First Financial Network, Inc., a woman-owned business.
Freddie Mac’s seasoned loan offerings focus on reducing less-liquid assets in the company’s mortgage-related investments portfolio in an economically sensible way. This includes sales of NPLs, securitizations of re-performing loans (RPLs) and structured RPL transactions. Since 2011, Freddie Mac has sold $9.7 billion of NPLs and securitized approximately $77.4 billion of RPLs consisting of $30.4 billion via fully guaranteed MBS, $34.9 billion via the Seasoned Credit Risk Transfer (SCRT) program, and $12.1 billion via the Seasoned Loans Structured Transaction (SLST) program. Requirements guiding the servicing of these transactions are focused on improving borrower outcomes and stabilizing communities.
