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InvestmentsMortgage

Fannie Mae selling $1.4 billion in non-performing loans

Sale includes five pools of loans

Fannie Mae announced Tuesday its latest sale of non-performing loans, which includes Fannie Mae’s second sale of a smaller pool of non-performing loans that are specifically targeted for placement with “smaller investors, non-profit organizations and minority- and women-owned businesses.”

This latest sale of non-performing loans comes in five separate pools of loans. The four larger pools total approximately 6,700 loans with $1.35 billion in unpaid principal balance.

The smaller pool is designated as a Community Impact Pool. The Community Impact Pool sales are smaller pools of loans that are geographically focused, with high occupancy and are marketed to encourage participation by smaller investors.

The Community Impact Pool consists of approximately 60 loans, focused in the Miami area, and totaling $14.5 million in unpaid principal balance.

Fannie Mae said that this sale of non-performing loans is being marketed in collaboration with Bank of America Merrill Lynch and First Financial Network.

“We are pleased to be offering our second Community Impact Pool sale, which will provide these borrowers with additional options to avoid foreclosure, while reducing the number of seriously delinquent loans that we own,” said Joy Cianci, Fannie Mae’s senior vice president for credit portfolio management. “We will continue to structure pool sales to encourage participation by non-profits and minority- and women-owned businesses.”

Bids are due on Feb. 3 for the four larger pools and on Feb. 18 for the Community Impact Pool, Fannie Mae said.

While some prominent figures in the federal government, including Sen. Elizabeth Warren, D-Mass., and Rep. Mike Capuano, D-Mass, have loudly criticized the government’s practice of selling non-performing loans to private investors, a recent report from the Urban Institute suggests that selling NPLs to the private sector is actually a good thing.

The report, which comes from the Urban Institute's Housing Finance Policy Center and is co-authored by HFPC Director Laurie Goodman and Center Creek Capital Group's Dan Magder, shows that private investors “can do more for borrowers” than the government.

Click here to read more about the Urban Institute’s report.

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