Investments Servicing

Goldman Sachs subsidiary buys massive NPL portfolio from Fannie Mae

$418M of non-performing loans sold to MTGLQ Investors

Past due foreclosure home

Fannie Mae announced Wednesday that it selected the winning bidders in its latest sale of non-performing loans, with a subsidiary of one of Wall Street’s biggest names among the winning bidders.

The total sale included four pools of loans that total $1.32 billion in unpaid principal balance spread across 6,540 loans.

The winning bidder for two of those pools, representing 2,068 loans that carry an unpaid principal balance of $418,414,683, was MTGLQ Investors, L.P., a “significant subsidiary” of Goldman Sachs.

According to the Securities and Exchange Commission, Goldman Sachs owns, directly or indirectly, at least 99% of the voting securities of MTGLQ Investors, L.P.

Fannie Mae announced Thursday that MTGLQ Investors was the winning bidder for pools #3 and #4 in the sale.

Pool #3 has 1,176 loans with an aggregate unpaid principal balance of $233,559,463. The average loan size of the pool is $198,712; and the loans carry a weighted average interest rate of 5.59%. The loans in Pool #3 also weighted average broker’s price opinion loan-to-value ratio of 79%.

The loans in Pool #3 carry an average delinquency of 59 months.

Pool #4 has 892 loans with an aggregate unpaid principal balance of $184,855,220. The average loan size of the pool is $207,217; and the loans carry a weighted average interest rate of 5.65%. The loans in Pool #4 also weighted average broker’s price opinion loan-to-value ratio of 86%.

The loans in Pool #4 also carry an average delinquency of 59 months.

Fannie Mae’s sale of loans to a Goldman Sachs affiliate may touch a nerve with some prominent figures in the federal government, including Sen. Elizabeth Warren, D-Mass., and Rep. Mike Capuano, D-Mass, who recently loudly criticized the government’s practice of selling non-performing loans to private investors.

But they may not the only ones who don’t like Fannie Mae’s latest sale. Last week, a partnership of “local elected officials and community groups” held events throughout the country to call on Fannie and Freddie to stop the sale of delinquent mortgages to “Wall Street investors.”

Fannie Mae, for its part, said that it is committed to responsibly reducing its loan holdings.

“We are committed to reducing Fannie Mae’s holdings of non-performing loans in a responsible way,” said Joy Cianci, senior vice president of credit portfolio management at Fannie Mae.

“We continue to work with struggling homeowners to prevent foreclosures whenever we can,” Cianci added. “This sale of seriously delinquent loans can create additional opportunities for borrowers to avoid foreclosure while reducing the impact of these loans for Fannie Mae and the taxpayers.”

According to Fannie Mae, the largest of the four pools, Pool #1, was purchased by Canyon Partners (Carlsbad Funding Mortgage Loan Acquisition, LP).

Pool #1 has 3,127 loans with an aggregate unpaid principal balance of $637,451,715. The average loan size of the pool is $203,891; and the loans carry a weighted average interest rate of 5.7%. The loans in Pool #1 also weighted average broker’s price opinion loan-to-value ratio of 79%.

The loans in Pool #1 also carry an average delinquency of 59 months.

And the buyer for Pool #2 is a frequent purchaser of non-performing loan pools from the government-sponsored enterprises.

The buyer for Pool #2 is Pretium Mortgage Credit Partners I Loan Acquisition, LP, which also recently bought three pools of non-performing loans that carried an unpaid balance of $657.8 million from Freddie Mac.

In October, Pretium was the winning bidder for one pool in a similar NPL sale. That pool carried a total unpaid principal balance of $209.4 million on 1,180 loans.

And in September, Pretium was the winning bidder for another NPL pool, which carried an unpaid principal balance of $158.1 million on 700 loans.

Pretium’s latest purchase, Pool #2 of the Fannie Mae sale, has 1,345 loans that carry an aggregate unpaid principal balance of $266,947,532.

The average loan size of the pool is $199,151; and the loans carry a weighted average interest rate of 5.58%. The loans in Pool #2 also weighted average broker’s price opinion loan-to-value ratio of 74%.

The loans in Pool #2 carry an average delinquency of 58 months.

According to Fannie Mae, the weighted average sale price of the combined pools was in the “mid-70’s” as a percentage of the loans’ unpaid principal balance.

When Fannie Mae announced this sale in January, it said that it was also offering a separate smaller pool of loans, which is designated as a Community Impact Pool.

The Community Impact Pool sales are smaller pools of loans that are geographically focused, with high occupancy and are marketed to encourage participation by smaller investors.

This Community Impact Pool consists of approximately 60 loans, focused in the Miami area, and totaling $14.5 million in unpaid principal balance.

Fannie said Wednesday that that sale is still open, with bids on the Community Impact Pool due on Feb. 18.

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