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Mortgage

Freddie Mac completes sale of $201 million pool of Ocwen-serviced loans

Third sale of the year

Freddie Mac sold 1,052 deeply delinquent Ocwen serviced non-performing loans from its mortgage investment portfolio as part of its Standard Pool Offerings, marking its third sale of seriously delinquent loans in 2015.

The enterprise first announced back in April that it was 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 planned to exit agency servicing entirely and has been selling off pools of agency servicing rights by the truckload lately, including the 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.

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.

According to Freddie's report of the sale, the loans now only have an aggregate unpaid principal balance of $201 million and were offered as a single pool of mortgage loans to LSF9 Mortgage Holdings.

The cover bid price (the second highest bid) was in the mid 70s percent of UPB. Weighted average BPO LTV, average loan size and note rate are 93%, $191,177 and 5.28%, respectively.

These loans have been delinquent for approximately three 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. Mortgages that were previously modified and subsequently became delinquent comprise 29% of the aggregate pool balance.

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.

The transaction is expected to settle in July 2015.

Fannie Mae also recently joined the NPL bandwagon and announced the winners of its first-ever sale of non-performing loans. Fannie's first NPL sale featured two pools, including approximately 3,000 loans totaling $762 million in unpaid principal balance.

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