Investments Lending Servicing

Freddie Mac sells off $706 million in non-performing loans to private investors

Familiar buyer buys up more than $500 million more in delinquent loans

Past due foreclosure home

Freddie Mac announced Tuesday that it agreed to sell more than $700 million in delinquent loans off of its books to a series of private investors, with one familiar buyer snapping up much of the offering.

The sale, which Freddie Mac previously announced last month, consists of five pools of 2,879 deeply delinquent non-performing loans that carry a total unpaid principal balance of $706 million.

The winning bidder for four of the five pools, totaling 2,250 loans and $516.6 million in unpaid principal balance, is Lone Star Funds, or more specifically the private-equity's trust, LSF9 Mortgage Holdings.

The purchase is the latest in string of NPL purchases by LSF9 Mortgage Holdings.

In March, LSF9 Mortgage Holdings was the wining bidder for three NPL pools from Freddie Mac, which carried a cumulative unpaid principal balance of $822.6 million.

In September of last year, LSF9 Mortgage Holdings also purchased three pools on NPLs from Freddie Mac that carried the exact same unpaid principal balance –$822.6 million.

In May 2015, 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.

In August 2015, the trust also purchased two pools of non-performing loans from Fannie Mae, which included approximately 3,900 loans totaling $765 million in unpaid principal balance.

According to information provided by Freddie Mac, the loans in this sale have been delinquent for nearly five 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.

Additionally, mortgages that were previously modified and subsequently became delinquent make up roughly 29% of the aggregate pool balance.

According to Freddie Mac, the aggregate pool is geographically diverse and has a loan-to-value ratio of approximately 92%, based on broker price opinion.

The loans were offered as five separate pools of mortgage loans, three of them geographically diverse Standard Pool Offerings. 

All five pools were sold at a weighted average price in the mid-60s as a percent of the total unpaid principal balance, Freddie Mac.

In this sale, LSF9 Mortgage Holdings was the winning bidder for four of the five pools, #1, #3, #4 and #5.

Pool #1 consists of 555 loans and carries an unpaid principal balance of $138.1 million. The loans carry a varied collateralized LTV range and a BPO CLTV of 109%.

The loans in Pool #1 are an average of 67 months delinquent and have an average loan balance of $248,800.

The loans in Pool #1 are all located in New Jersey.

Pool #3 consists of 798 loans and carries an unpaid principal balance of $165.4 million. The loans carry a collateralized LTV range of less than 90% and a BPO CLTV of 69%.

The loans in Pool #3 are an average of 50 months delinquent and have an average loan balance of $207,300.

Pool #4 consists of 364 loans and carries an unpaid principal balance of $90 million. The loans carry a collateralized LTV range of greater than or equal to 90% and less than 110% and a BPO CLTV of 99%.

The loans in Pool #4 are an average of 53 months delinquent and have an average loan balance of $247,400.

Pool #5 consists of 533 loans and carries an unpaid principal balance of $123.1 million. The loans carry a collateralized LTV range of greater than or equal to 110% and a BPO CLTV of 137%.

The loans in Pool #5 are an average of 49 months delinquent and have an average loan balance of $230,900.

Upland Mortgage Acquisition Company II purchased the remaining pool.

Pool #2 consists of 629 loans and carries an unpaid principal balance of $189.7 million. The loans carry a varied collateralized LTV range and a BPO CLTV of 87%.

The loans in Pool #2 are an average of 65 months delinquent and have an average loan balance of $301.600.

The loans in Pool #1 are all located in New York.

All of the loans in the sale are currently being serviced by Bayview Loan Servicing.

The transaction is expected to settle in August 2016, and servicing will be transferred post-settlement.

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