Investments Servicing

Freddie Mac sells off $1.1 billion in Ocwen-serviced mortgages

Deeply delinquent non-performing loans sold to multiple buyers

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Freddie Mac announced Wednesday that it selected the winning bidders in the sale of more than $1 billion in non-performing loans that are currently being serviced by Ocwen Loan Servicing, the servicing arm of Ocwen Financial (OCN).

The sale included five separate pools with a total of 5,208 deeply delinquent non-performing loans. The loans carry a total unpaid principal balance of more than $1.1 billion.

According to Freddie Mac, Lone Star Funds, or more specifically the private-equity's trust LSF9 Mortgage Holdings, was the winning bidder for three of the pools, while Pretium Mortgage Credit Partners and OSAT Sponsor II bought the other two pools.

According to the announcement from Freddie Mac, the servicing will be transferred away from Ocwen after the deals close, which is expected to settle in October.

The loans have been delinquent for approximately three and a half years, on average. 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 said in a release.

Mortgages that were previously modified and subsequently became delinquent comprise approximately 33% of the aggregate pool balance.

The aggregate pool is geographically diverse and has a loan-to-value ratio of approximately 91.1%, based on broker price opinion.

This is third large purchase of Ocwen-serviced delinquent loans for LSF9 Mortgage Holdings this year. In May, Freddie Mac sold 1,052 deeply delinquent Ocwen-serviced non-performing loans with an aggregate unpaid principal balance of $201 million to LSF9 Mortgage Holdings.

LSF9 Mortgage Holdings being named the winner of a GSE non-performing loan auction is becoming quite prevalent, with the trust also recently purchasing two pools of non-performing loans from Fannie Mae. That deal included approximately 3,900 loans totaling $765 million in unpaid principal balance.

In this newly announced deal, LSF9 Mortgage Holdings purchased three pools with a total of $822.6 million in unpaid balance.

Pool 1 had 2,201 loans with an unpaid principal balance of $486.4 million. The loans carry a collateralized LTV range of between 50% and 110%, with a BPO CLTV of 84%.

The loans in Pool 1 are 40 months delinquent, on average, and a carry an average loan balance of $221,000.

LSF9 Mortgage Holdings also purchased Pool 3, which carried a total unpaid principal balance of $288.4 million on 1,253 loans. Those loans carry a CLTV range above 110% and a BPO CLTV of 138.2%.

The loans in Pool 3 have been delinquent for an average of 47 months and carry an average balance of $230,200.

LSF9 Mortgage Holdings also purchased Pool 5, which carried a total unpaid principal balance of $47.8 million on 488 loans. Those loans carry a CLTV range less than 50% and a BPO CLTV of 32.5%.

The loans in Pool 5 have been delinquent for an average of 35 months and carry an average balance of $98,000.

Pretium Mortgage Credit Partners is the winning bidder for Pool 2, which carries an unpaid principal balance of $158.1 million on 700 loans. Those loans carry a CLTV range of between 50% and 110% and a BPO CLTV of 83.8%.

The loans in Pool 2 have been delinquent for an average of 39 months and carry an average balance of $225,800.

OSAT Sponsor II is the winning bidder for Pool 4, which carries an unpaid principal balance of $127.9 million on 566 loans. Those loans carry a CLTV range above 110% and a BPO CLTV of 137.5%.

The loans in Pool 2 have been delinquent for an average of 46 months and carry an average balance of $225,900.

Advisors to Freddie Mac on the transaction are Credit Suisse SecuritiesWells Fargo Securities and First Financial Network.

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