Fannie Mae announced the official winners of its first-ever sale of non-performing loans, joining Freddie Mac as they both start to sell off NPL pools.  

Fannie first announced it intended to join Freddie Mac in selling off pools of non-performing loans at the beginning of April.

Fannie's first NPL sale featured two pools, including approximately 3,000 loans totaling $762 million in unpaid principal balance.

The winning bidder of Pool #1 was SW Sponsor, while the winner of Pool #2 was Neuberger Berman Fixed Income Funds’ affiliate PRMF Acquisition, Fannie Mae announced Friday.

In collaboration with Bank of America Merrill Lynch, Credit Suisse and The Williams Capital Group, Fannie Mae began marketing these loans to potential bidders on April 8.

The loans were offered in two separate pools:

  • Pool #1:  710 loans with an aggregate UPB of $173.8 million.
  • Pool #2:  2,358 loans with an aggregate UPB of $587.9 million.

The cover bid prices (second highest bids) for Pool #1 is 71.9% of Broker Price Option (58.8% UPB) and for Pool #2 is 71.0% of BPO (57.8% UPB).

The average loan size and average note rate on the aggregate of the two pools were $248,285 and 5.93%, respectively.

The average delinquency of the loans was approximately five years with an average BPO loan-to-value of 123%.

“We are pleased to offer this first transaction, which will help us reduce the number of seriously delinquent loans we own while providing additional foreclosure prevention opportunities,” said Joy Cianci, Fannie Mae’s senior vice president for credit portfolio management, when the sale was announced.

“We plan to build these sales into a programmatic offering, and look forward to working with a diverse range of potential buyers over time, including smaller investors, nonprofit organizations and minority- and women-owned businesses,” Cianci added.

The transactions are expected to close in mid-June, Fannie Mae said.

Fannie’s first sale of NPLs meets the directive laid out by the Federal Housing Finance Agency, which outlined the new requirements for sales of NPLs by Freddie Mac and Fannie Mae to ensure the loans are transferred to capable mortgage servicers.

"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," FHFA Director Melvin Watt said last month. "Under the requirements announced, servicers must consider borrowers for a range of alternatives to foreclosure."