Investments Lending Servicing

Fannie Mae sells $1 billion in NPLs to Goldman Sachs subsidiary, private equity

GSE announces winners of 7th auction

Past due foreclosure home

In what is becoming a frequent occurrence, Fannie Mae announced Tuesday that it sold a large portfolio of non-performing loans to a collection of private equity funds and a subsidiary of Goldman Sachs.

The government-sponsored enterprise said Tuesday that it sold off $1.06 billion in non-performing loans from its portfolio, with some now-familiar names making up the buyer pool.

Among the buyers is MTGLQ Investors, 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.

This latest purchase is MTGLQ Investors’ fifth purchase of NPLs from one of the GSEs this year alone.

Over the course of this year, in various sales, MTGLQ Investors bought more than $2.3 billion in unpaid principal balance from the GSEs.

In this sale, MTGLQ Investors purchased 2,887 non-performing loans from Fannie Mae. Those loans carry an aggregate unpaid principal balance of $468,901,523, pushing MTGLQ Investors total NPL acquisitions this year above $2.7 billion.

The pool of loans purchased by MTGLQ Investors also carry an average loan size of $162,418; a weighted average note rate of 5.49%; a weighted average delinquency of 44 months; and a weighted average broker's price opinion loan-to-value ratio of 108%.

In total, this latest sale from Fannie Mae included 6,800 loans totaling $1.06 billion in unpaid principal balance, divided into four pools.

MTGLQ Investors purchased Pool #1, and the three remaining buyers included some other familiar names.

According to Fannie Mae, the second pool, which contained 1,551 loans with an aggregate unpaid principal balance of $234,057,619, was purchased by Neuberger Berman, or more specifically PRMF Acquisition.

Last month, Neuberger Berman via PRMF Acquisition acquired three pools of NPLs from Fannie Mae. In that deal, PRMF Acquisition acquired 4,721 loans with an aggregate unpaid principal balance of $759,860,824.

In this latest sale, PRMF Acquisition acquired 1,551 NPLs with an aggregate unpaid principal balance of $234,057,619.

These loans carry an average loan size of $150,908; a weighted average note rate of 5.55%; a weighted average delinquency of 45 months; and a weighted average broker's price opinion loan-to-value ratio of 97%.

According to Fannie Mae, the buyer for the third pool of NPLs is Lone Star Funds, or more specifically, LSF9 Mortgage Holdings, which is another frequent NPL buyer.

In this sale, LSF9 Mortgage Holdings bought 1,638 NPLs with an aggregate unpaid principal balance of $237,997,902. These loans carry an average loan size of $145,298; a weighted average note rate of 5.49%; a weighted average delinquency of 33 months; and a weighted average broker's price opinion loan-to-value ratio of 110%.

In the July sale, Fannie sold 4,537 loans with an aggregate unpaid principal balance of $746,438,433 to LSF9 Mortgage Holdings.

Earlier in the year, LSF9 Mortgage Holdings bought $516.6 million in unpaid principal balance from Freddie Mac. In March, LSF9 Mortgage Holdings was the winning bidder for three NPL pools from Freddie Mac, which carried a cumulative unpaid principal balance of $822.6 million.

And in d, LSF9 Mortgage Holdings also purchased three pools on NPLs from Freddie Mac that carried the exact same unpaid principal balance –$822.6 million.

In this latest sale, the final, and smallest, pool of NPLs was purchased by MFA Financial. That pool included 751 loans with an aggregate unpaid principal balance of $123,913,046. Those loans also carry an average loan size of $164,997; a weighted average note rate of 5.12%; a weighted average delinquency of 39 months; and a weighted average broker's price opinion loan-to-value ratio of 124%.

According to Fannie Mae, this sale of non-performing loans was marketed in collaboration with Wells Fargo Securities and The Williams Capital Group.

The loans in this sale are subject to the new rules for NPL sales announced by the Federal Housing Finance Agency in April.

Among those rules are that buyers of purchase non-performing loans from Fannie Mae or Freddie Mac must now evaluate certain underwater borrowers for modifications that include principal and/or arrearage forgiveness.

Buyers are also forbidden from “walking away” from vacant homes, and the also rules establish more specific proprietary loan modification standards for NPL buyers.

According to the FHFA, these rules are designed to minimize foreclosures, help mitigate the potential for neighborhood blight and decay, and help improve loan modification success rates.

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