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InvestmentsMortgage

Freddie Mac selling $233 million pool of Ocwen-serviced loans

Non-performing loans are “deeply delinquent”

Freddie Mac announced Tuesday that it is preparing to auction off a $233 million pool of non-performing loans, which are serviced by Ocwen Financial (OCN).

Ocwen said in December that it plans to exit agency servicing entirely and has been selling off pools of agency servicing rights by the truckload lately, including the recent sale of a $25 billion MSR portfolio to Nationstar Mortgage (NSM), just over a month after agreeing to sell another $9.8 billion portfolio of agency servicing to Nationstar.

Now, Freddie Mac is seeking to sell off a $233 million pool of “geographically diverse, deeply delinquent” non-performing loans, which are currently serviced by Ocwen Loan Servicing.

The move to sell a pool of non-performing loans is becoming more commonplace for Freddie Mac, which recently announced a new program for auctioning off pools of deeply delinquent non-performing loans from its mortgage investment portfolio.

The new program, called Extended Timeline Pool Offering, or EXPO, will target smaller investors by making smaller pools of non-performing loans available in addition to the larger pools of NPLs that Freddie recently began selling.

Last week, Freddie Mac also made its first EXPO offering available. According to Freddie Mac, the first EXPO offering is a pool of deeply delinquent NPLs that carry an aggregate unpaid principal balance of $35 million.

The loans offered for sale are all located in Miami-Dade County, Florida.

The Ocwen-serviced pool is a Standard Pool Offering, which are the larger of the two NPL pool sale structures. Freddie said that all eligible bidders, including private investors, minority and women-owned businesses, nonprofits and neighborhood advocacy funds are encouraged to bid.

Freddie said the winning bidder will be determined on the basis of economics, subject to meeting Freddie Mac's internal reserve levels. To participate, all potential bidders are required to be approved by Freddie Mac to access the secure data room containing information about the NPLs and to bid on the NPL pool.

At the beginning of March, 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.

Advisors to Freddie Mac on the transaction are Bank of America Merrill Lynch, Wells Fargo Securities and CastleOak Securities.

Bids for the pool are due from qualified bidders on May 20, 2015, and Freddie said the sale is expected to settle in July 2015.

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