Freddie Mac released the background on its second pilot sale of deeply delinquent nonperforming loans that served as a foundation for the new requirements of all sales of NPLs by the government-sponsored enterprises, Fannie Mae and Freddie Mac.

The enterprise sold 1,975 loans, with an aggregate unpaid principal balance of $392 million, from its mortgage investment portfolio on Feb. 6, 2015. The transaction is expected to settle in mid-March.

These loans have been delinquent for approximately three years, on average. And due to the deep delinquency status of the loans, the borrowers have likely been evaluated or are already in various stages of loss mitigation. Mortgages that were previously modified and subsequently became delinquent comprise 24.1% of the aggregate pool by loan count.

The loans were offered as three separate pools of mortgage loans:

  1. 752 NPLs with an aggregate UPB of $136.2 million and a BPO LTV of 74%
  2. 468 NPLs with an aggregate UPB of $102.4 million and a BPO LTV of 100%
  3. 755 NPLs with an aggregate UPB of $153.1 million and a BPO LTV of 135%

Pretium Mortgage Credit Partners I Loan Acquisition was the winning bidder on pool one and pool two, and Bayview Acquisition was the winning bidder on pool three. 

The average loan size and note rate on the aggregate of the three pools were $198,400 and 5.39%, respectively. The aggregate weighted average loan-to-value (LTV) was 96.1% of the property value, based on Broker Price Opinions (BPO) of the underlying properties.

On Monday, the Federal Housing Finance Agency stated the new requirements for sales of NPLs by Freddie Mac and Fannie Mae to make sure the loans go to capable mortgage servicers.

The new standards were based on this sale, along with a sale of delinquent loans in August 2014 covering $596 million of unpaid principal balance.

"FHFA expects that with these enhanced requirements, NPL sales by Freddie Mac and Fannie Mae will result in more favorable outcomes for borrowers and local communities, while also reducing losses to the Enterprises and, therefore, to taxpayers," said FHFA Director Melvin Watt.  "Under the requirements announced, servicers must consider borrowers for a range of alternatives to foreclosure," Watt said.

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