Lawmakers and activists that have been calling for Fannie Mae, Freddie Mac, and HUD to sell their non-performing mortgage loans to non-profits saw their wish come true on Thursday.
New Jersey Community Capital [1] (NJCC), a non-profit Community Development Financial Institution (CDFI), was the winning bidder for Fannie Mae [2]’s second-ever Community Impact Pool auction of non-performing, deeply delinquent single-family residential mortgage loans, according to an announcement from Fannie Mae on Thursday [3].
This Community Impact Pool includes 53 loans on properties located in the Miami, Florida, area, with an aggregate unpaid principal balance of $13.2 million. Community Impact Pools of loans are structured to attract diverse participation from non-profits, smaller investors, and women- and minority-owned businesses.
NJCC also won Fannie Mae’s first-ever Community Impact Pool auction in September 2015 [4]. That pool featured 75 non-performing loans in the Tampa, Florida, area with an aggregate UPB of $11 million.
“We’re pleased that New Jersey Community Capital continues to be an active participant in our non-performing loan sales as part of their continuing efforts to help stabilize neighborhoods,” said Joy Cianci, SVP, Credit Portfolio Management, Fannie Mae. “This sale was designed to give homeowners as many options as possible to avoid foreclosure. Fannie Mae will continue to seek opportunities for a diverse range of buyers to participate in our sales of non-performing loans.”
Fannie Mae began marketing the transaction on January 12, 2016, in collaboration with Bank of America Merrill Lynch and First Financial Network. The transaction is expected to close on April 21, 2016.
“We’re pleased that New Jersey Community Capital continues to be an active participant in our non-performing loan sales as part of their continuing efforts to help stabilize neighborhoods.”
Joy Cianci, Fannie Mae
The average delinquency rate on the loans included in the Community Impact Pool was more than five years (69 months) with an average broker’s price opinion loan-to-value ratio of 137 percent. The average loan size was approximately $250,000. The cover bid price was 50.51 percent of UPB (69 percent of the broker’s price opinion.
“We are so excited to win this second Community Impact Pool and continue working with our local nonprofit players to expand NJCC’s innovative foreclosure mitigation and prevention programs in Florida,” said Wayne T. Meyer, NJCC. “These programs help to keep families in their homes while working to stabilize the surrounding communities. We have already helped over 425 homeowners in Florida through our loss mitigation program, and look forward to continuing this progress.”
The sale of the latest Community Impact Pool came three weeks after many cities around the country organized protests [5] calling for government agencies to sell non-performing loans to non-profits rather than private investors or private equity firms. Baltimore, Philadelphia, New York, East Orange, New Jersey, and San Francisco are a few of the cities that participated in the protests, calling for the GSEs and HUD to sell troubled mortgage loans to non-profits which they believe will be more effective at preventing foreclosures and stabilizing the neighborhoods in which the properties are located. The leaders of the nationwide campaign were Alliance of Californians for Community Empowerment and its national partner organization, Center for Popular Democracy.