Mortgage

Goldman Sachs subsidiary again buys non-performing loans from Fannie Mae

Not everyone is excited for the sale

Fannie Mae announced today that MTGLQ Investos, L.P., a "significant subsidiary" of Goldman Sachs is yet again the winning bidder for its fifth non-performing loan sale.

According to the Securities and Exchange Commission, Goldman Sachs owns, directly or indirectly, at least 99% of the voting securities of MTGLQ Investors, L.P.

Fannie Mae announced the sale of its latest sale of non-performing loans, including the third Community Impact Pool that it has offered back in April. Bank of America Merrill Lynch, First Financial Network andCastle Oaks Securities served as advisors for the marketing of the sale of these non-performing loans.

“We continue to strive to help struggling borrowers avoid foreclosure, but many loans remain non-performing despite our many attempts to pursue loss mitigation alternatives,” said Joy Cianci, Fannie Mae senior vice president of Credit Portfolio Management.

“With this sale, we continue to reduce our holdings of non-performing loans which creates additional opportunities for borrowers to avoid foreclosure, and limits the potential impact of these loans on Fannie Mae and taxpayers,” Cianci said.

But not everyone is happily anticipating the sales. Sen. Elizabeth Warren, D-Mass. and Rep. Mike Capuano, D-Mass. recently loudly criticized the government’s practice of selling non-performing loans to private investors.

That being said, The Federal Housing Finance Agency is setting up new requirements for sales of nonperforming loans by Freddie Mac and Fannie Mae to help insure the loans go into the hands of more experienced, empathetic and capable mortgage servicers.

The sale was comprised of 7,900 loans, which totaled $1.48 billion in unpaid principal balance. These were divided and sold in four different pools. Goldman Sachs was the winning bidder and expects to close the sale on June 27, 2016.

Here is the breakdown of each pool:

  • Pool one: 3,571 loans with an aggregate unpaid principal balance of $669,357,511; average loan size $187,443; weighted average note rate 5.33%; weighted average delinquency 48 months; weighted average broker’s price opinion loan-to-value ratio of 81%
  • Pool two: 2,374 loans with an aggregate unpaid principal balance of $445,425,048; average loan size $187,626; weighted average note rate 5.34%; average delinquency 48 months; weighted average broker’s price opinion loan-to-value ratio of 79%
  • Pool three: 1,177 loans with an aggregate unpaid principal balance of $222,059,021; average loan size $188,665; weighted average note rate 5.41%; average delinquency 50 months; weighted average broker’s price opinion loan-to-value ratio of 81%
  • Pool four: 805 loans with an aggregate unpaid principal balance of $146,797,937; average loan size $182,358; weighted average note rate 5.45%; average delinquency 50 months; weighted average broker’s price opinion loan-to-value ratio of 85%

Overall, the average sale price of the pools was mid-70% of unpaid principal balance. 

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