Fannie Mae and Freddie Mac have sold 59,629 nonperforming loans as of August, with a total unpaid balance of $11.9 billion, according to the Non-Performing Loan Sales Report released by the Federal Housing Finance Agency today. On average, the NPLs had a delinquency of 3.4 years and an average current loan-to-value ratio of 97 percent. Nearly half of the NPLs sold came from New Jersey, New York and Florida.
The report also surveyed borrower outcomes based on data from the 25,612 NPLs sold before Dec. 31, 2015. As of June 30, 2016, 31 percent of these NPLs had been resolved; 15 percent were resolved with foreclosure and 16 percent without. The data showed that foreclosure avoidances were highest when homes were occupied by borrowers — only 9.8 percent of vacant properties avoided foreclosure, compared to 17.1 percent when homes were borrower-occupied. 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 eight out of nine of these pools that were settled by August 31, 2016, and is a service provider for the ninth pool, the report said.
