Fannie Mae [1] and its fellow GSE, Freddie Mac [2], for years have been selling pools of non-performing loans as part of their ongoing efforts to reduce the size of their retained mortgage portfolio. These pools specifically have been focused on improving communities and homeowners alike.
“We continue to strive to help struggling homeowners and neighborhoods recover,” said Joy Cianci, Fannie Mae’s Senior Vice President, Single-Family Credit Portfolio Management.
But this week, Fannie Mae began marketing its first sale of reperforming loans to interested purchasers [3].
“We are pleased to offer this first sale of reperforming loans,” said Bob Ives, VP of Retained Portfolio Asset Management, Fannie Mae. “This sale will support our efforts to reduce the size of the company’s balance sheet.”
Reperforming loans are mortgages that were previously delinquent, but are performing again because payments on the mortgages have become current with or without the use of a loan modification plan. The terms of Fannie Mae’s reperforming loan sale require the buyer to offer loss mitigation options designed to be sustainable, to any borrower who may re-default after the sale, and prohibit the buyer from “walking away” from any home that might become vacant.
This first pool offering is set to contain approximately 3,600 loans, totaling $806 million in unpaid principal balance and will be made available for purchase by qualified bidders. This sale of reperforming loans is being marketed in collaboration with Citigroup Global Markets, Inc.
Fannie Mae produced a tentative timeline for this first sale citing October 11 as the day marketing begins, October 13 being the day the data room open for bidders, and November 1 as the day bids for this pool are due. Following the deadline for bids, November 2 is marked as tentatively when the bid will be awarded, and early December due diligence will end. By mid-December, the sale is expected to close.