Fannie Mae and Freddie Mac sold 130,808 non-performing loans with a total unpaid principal balance (UPB) of $24.5 billion from program inception in 2014 through June 30, 2021.
The Federal Housing Finance Agency recently released its latest report on the sale of NPLs by Fannie Mae and Freddie Mac (the Enterprises). The Enterprise Non-Performing Loan Sales Report includes sales information about NPLs sold through June 30. Borrower outcomes reflect NPLs reported through June 30, 2021, and sold through Dec. 31, 2020.
The sale of NPLs reduces the number of delinquent loans in the Enterprises' portfolios and transfers credit risk to the private sector. FHFA and the Enterprises impose requirements on NPL buyers designed to achieve more favorable outcomes for borrowers than foreclosure.
The loans included in the NPL sales had an average delinquency of 2.9 years and an average current mark-to-market loan-to-value (LTV) ratio of 91%, not including capitalized arrearages.
Some Key NPL Sales Highlights:
- The average delinquency for pools sold ranged from 1.4 years to 6.2 years.
- Fannie Mae has sold 86,216 loans with an aggregate UPB of $15.8 billion, an average delinquency of 3.0 years, and an average LTV of 89%.
- Freddie Mac has sold 44,592 loans with an aggregate UPB of $8.7 billion, an average delinquency of 2.8 years, and an average LTV of 95%.
- NPLs in New Jersey, New York, and Florida represented 43% of the NPLs sold.
Some Key Borrower Outcomes Highlights:
- The borrower outcomes in the report are based on 128,087 NPLs that were settled by Dec. 31, 2020, and reported as of June 30, 2021.
- Compared to a benchmark of similarly delinquent Enterprise NPLs that were not sold, foreclosures avoided for sold NPLs were higher than the benchmark.
- NPLs on homes occupied by borrowers had the highest rate of foreclosure avoidance outcomes (41.2% foreclosure avoided versus 17.1% for vacant properties).
- NPLs on vacant homes had a much higher rate of foreclosure, more than double the foreclosure rate of borrower-occupied properties (77.4% foreclosure versus 33% for borrower occupied properties). Foreclosures on vacant homes typically improve neighborhood stability and reduce blight as the homes are sold or rented to new occupants.
- The average UPB of NPLs sold was $187,588.
FHFA said it will continue to provide reporting on NPL sales borrower outcomes on an ongoing basis.
To read the full report, click here.