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Freddie Mac sells first pool of non-performing loans to non-profit buyer

Small pool of Wells Fargo-serviced loans sold

Freddie Mac announced Monday that it sold its first pool of non-performing loans to a non-profit buyer, Community Loan Fund of New Jersey, Inc.

The non-performing loan sale was initially announced in November, as part of a larger offering of $1.2 billion in “deeply delinquent” loans that were currently being serviced by Wells Fargo.

The sale to Community Loan Fund of New Jersey was part of Freddie Mac’s Extended Timeline Pool Offerings, which target participation by smaller investors, including non-profits and minority and women-owned businesses.

There were two EXPO pools that were offered as part of the November sale, but only one of the pools found a buyer via auction.

The pool to be purchased by Community Loan Fund of New Jersey carries an unpaid principal balance of $18.4 million on 103 loans.

According to Freddie Mac, the 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, Freddie Mac said.

According to Freddie Mac, mortgages that were previously modified and subsequently became delinquent make up approximately 43% of the aggregate pool balance.

The aggregate pool is geographically concentrated in Miami-Dade and Tampa, Florida, and has a loan-to-value ratio of approximately 88%, based on broker price opinion.

The transaction is expected to settle in Feb. 2016 and servicing will be transferred post-settlement.

Advisors to Freddie Mac on the transaction are Wells Fargo SecuritiesJPMorgan Securities and First Financial Network.

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