Freddie Mac announced that a non-profit organization, Community Loan Fund of New Jersey, has won the latest auction of two pools of non-performing single-family residential mortgage loans (NPLs) sold by the GSE.
The sale is part of Freddie Mac’s Extended Pool Timeline Offerings (EXPO), which are smaller, geographically-concentrated pools of NPLs targeted for participation from non-profits, community development funds, and minority- and women-owned businesses. The two pools sold to Community Loan Fund of New Jersey contain a combined 189 loans with an aggregate unpaid principal balance (UPB) of $43.7 billion. The loans are concentrated in Florida and serviced by Bayview Loan Servicing. The average LTV ratio of the loans was 93 percent based on Broker Price Opinion.
The loans sold in this pool were an average of almost five years delinquent, according to Freddie Mac.
“Given the deep delinquency status of the loans, the borrowers have likely been evaluated previously for or are already in various stages of loss mitigation, including modification or other alternatives to foreclosure, or are in foreclosure,” Freddie Mac stated in its announcement. “Mortgages that were previously modified and subsequently became delinquent comprise approximately 33 percent of the aggregate pool balance.”
Freddie Mac has sold approximately $4.3 billion in NPLs through the first quarter of 2016 from the first NPL sale in 2014, as part of the strategy to reduce the less liquid assets from its mortgage-related investments portfolio, according to Freddie Mac.
The FHFA, Freddie Mac’s regulator, announced enhanced guidelines for its nonperforming loan sales in March 2015 and announced further enhancements in April 2016. According to FHFA, the enhancements are aimed at achieving the best outcomes for borrowers of the non-performing loans, which in most cases are years delinquent. The enhancements include applying a “waterfall of resolution tactics” and engaging in the foreclosure process only as a last resort when it cannot be avoided.