Freddie Mac recently sold via auction 5,364 deeply delinquent non-performing loans (NPLs) from its mortgage-related investments portfolio, according to an announcement from the GSE. The transaction is expected to settle in December 2016, and servicing will be transferred post-settlement. The sale is part of Freddie Mac's Standard Pool Offerings (SPO). Freddie Mac, through its advisors, began marketing the transaction on September 8, 2016, to potential bidders, including minority and women-owned businesses, non-profits, neighborhood advocacy funds and private investors active in the NPL market.
The loans were offered as four separate pools of geographically diverse mortgage loans. Investors had the flexibility to bid on each pool individually and/or a combination of pools. The loans are currently serviced by either Wells Fargo Bank, N.A. or Ditech Financial, LLC. All four pools were sold at a weighted average price in the mid-70s as a percent of the total unpaid principal balance.
The loans have been delinquent for over two years, on average. Given the deep delinquency status of the loans, the borrowers have likely been evaluated previously for or are already in various stages of loss mitigation, including modification or other alternatives to foreclosure, or are in foreclosure. Mortgages that were previously modified and subsequently became delinquent comprise approximately 47.5 percent of the aggregate pool balance. The aggregate pool is geographically diverse and has a loan-to-value ratio of approximately 86 percent, based on Broker Price Opinion.
Pools #1 and #2 were purchased by Pretium Mortgage Credit Partners | Loan Acquisition, LP.
The first of these pools included an unpaid principal balance of $292.7 million, a loan count of 1813, a CLTV range of less than 90, BPO CLTV of 71, an average of 29 months of delinquency, and a national distribution. The second of these pools included an unpaid principal balance of $220.0 million, a loan count of 1283, a CLTV range of less than 90, BPO CLTV of 70 an average of 21 months of delinquency, and a national distribution.
Pool #3 was purchased by Upland Mortgage Acquisition Company II, LLC and included an unpaid principal balance of $227.2 million, a loan count of 1113, a CLTV range of greater than or equal to 90 and less than 110, BPO CLTV of 99, an average of 28 months of delinquency, and a national distribution.
The final pool was purchased by Rushmore Loan Management Services LLC and included an unpaid principal balance of $222.8 million, a loan count of 1155, a CLTV range of greater than or equal to 110, BPO CLTV of 136, an average of 29 months of delinquency, and a national distribution.
Advisors to Freddie Mac on the transaction were Wells Fargo Securities, LLC and First Financial Network, Inc., a woman-owned business. And additionally, through the first half of 2016, Freddie Mac sold $5.3 billion in NPLs as part of its strategy to reduce the less liquid assets in its mortgage-related investments portfolio.