FHFA Releases Data on GSEs’ Sales of Non-Performing Loans

Fannie Mae and Freddie Mac have sold more than 41,600 nonperforming loans as of May 31, with a total unpaid balance of $8.5 billion, according to the first Non-Performing Loan Sales Report released by the Federal Housing Finance Agency today. On average, the nonperforming loans had a delinquency of 3.4 years and an average current loan-to-value ratio of 98 percent. Just under half of the NPLs sold came from New Jersey, New York and Florida.

In addition to examining sales, the report also surveyed borrower outcomes based on data from the 8,849 NPLs sold before June 30, 2015. The data showed that foreclosure avoidances were highest when homes were occupied by borrowers — only 6.2 percent of vacant properties avoided foreclosure, compared to 13 percent when homes were borrower-occupied. As of Dec. 31, 2015, 24 percent of those NPLs had been resolved — 12 percent without foreclosure and 12 percent with foreclosure. The report also compared the foreclosure rate among sold NPLs to a benchmark of similarly delinquent loans that were not sold, noting that sold NPLs resulted in fewer foreclosures.

The sale of NPLs by the GSEs is intended to help reduce the number of seriously-delinquent loans Fannie and Freddie own by transferring credit risk to the private sector. The GSEs sell NPLs through national pool offerings, which include pools specifically structured to attract diverse participation by nonprofits, small investors and minority and women-owned businesses. The nonprofit Community Loan Fund of New Jersey was the winning bidder on five out of six of these pools that were settled before May 2016, and is a service provider for the sixth pool, the report said.