[1]Freddie Mac [2] sold 5,398 deeply delinquent non-performing loans with an aggregate unpaid principal balance (UPB) of $985 million through an auction on March 25, according to an announcement [3] from Freddie Mac on Friday.
The loans were sold in three pools, and the winning bidder for all three was GCAT Management Services 2015-13. The loans were an average of about three years delinquent, meaning it is likely that all the borrowers have been evaluated for or are in some stage of loss mitigation, or are in foreclosure. Nearly one-quarter of the loans sold (24.7 percent) were previously modified and later became delinquent.
The breakdown of the three pools of loans sold is as follows:
- Pool No. 1 included 3,577 NPLs ; an aggregate UPB of $629.6 million; and a BPO LTV of 74 percent
- Pool No. 2 included 1,331 NPLs; an aggregate UPB of $235.9 million; and a BPO LTV of 84 percent
- Pool No. 2 included 490 NPLs; an aggregate UPB of $120.0 million; and a BPO LTV of 74 percent
The average loan size for the aggregate of the three pools of loans was $182,562, and the note rate was 5.5 percent. Based on Broker Price Opinions (BPOs) of the underlying properties, the average weighted LTF was 76 percent of the property value.
The advisors for Freddie Mac on the sale were Wells Fargo Securities, Credit Suisse, and The Williams Capital Group, according to Freddie Mac. The GSE said it expects the transaction to settle in early May.
Freddie Mac's conservator, the Federal Housing Finance Agency (FHFA [4]), is requiring Freddie Mac and its fellow GSE, Fannie Mae [5], to reduce the number of non-performing residential loans in their portfolios. The sale announced Friday is the third sale of NPLs Freddie Mac has completed in the last eight months; in August, the Enterprise sold a bundle of NPLs totaling $596 million in UPB and a bundle in February that covered $392 in UPB. The sale announced Friday at nearly $1 billion was the largest to date for Freddie Mac; combined, the three sales total $1.97 billion in aggregate UPB.
In early March, the FHFA enacted enhanced requirements [6] for the buyers and servicers of Agency non-performing loans. Among other requirements, bidders must identify servicing partners at the time of qualification and complete a questionnaire to demonstrate a record of successful loan resolution through foreclosure alternatives. Servicers who purchase non-performing Agency loans must apply a "waterfall of resolution tactics" before resorting to foreclosure and report loan resolution results and borrower outcomes to Fannie Mae and Freddie Mac for four years after the NPL sale.