Freddie Mac has announced plans to sell off a pool of $983 million in seasoned re-forming and moderately delinquent loans. The pool is comprised of HAMP and other step-rate modified loans, as well as loans that have undergone GSE-specific modifications. All loans are currently serviced by Mr. Cooper—which changed its name from Nationstar Mortgage earlier this summer.
The sale—which will mark Freddie Mac’s biggest seasoned loan transaction to date—will be completed in two steps, according to the Enterprise’s announcement on the matter.
“The initial step involves the sale of the loans via a competitive bidding process subject to a securitization term sheet,” Freddie reported yesterday. “The sale will be executed on the basis of economics, subject to meeting Freddie Mac's internal reserve levels. The second step will require the purchaser of the loans to securitize the loans and retain the first loss subordinate tranche. Freddie Mac will guarantee and acquire the guaranteed security issued from such securitization.”
The pool won’t just go to the highest bidder, though. According to Freddie Mac, the chosen buyer will need to be a veteran investor with “substantial experience in managing both performing and moderately delinquent mortgage loans as well as securitizing mortgage loans.”
Credit Suisse Securities and The Williams Capital Group are advising Freddie Mac on the sale, which is the Enterprise’s second transaction of its kind this year. Its first seasoned re-performing loan offering was sold in May and included $292 million in loans from Freddie’s mortgage investments portfolio.
As of today, Freddie Mac has sold off $7 billion in nonperforming loans. The GSE has also securitized $31 billion in re-performing loans—$26 billion of which were in participation certificates, while $5 billion were in structured offerings. To learn more about Freddie Mac’s seasoned loan sales and transactions, visit FreddieMac.com.