Fannie Mae began marketing its first sale of re-performing loans today in an effort to reduce the size of its retained mortgage portfolio, according to a release from the company.
The company announced it would begin securitizing these loans earlier this year after the Federal Housing Finance Agency announced that Fannie Mae and Freddie Mac will be reducing the principal on as many as 33,000 delinquent or underwater borrowers
Re-performing loans are mortgages that were previously delinquent, but now are performing because payments on the mortgage became current. This can occur with or without the use of a loan modification plan.
The pool is made up of about 3,600 loans totaling $806 million in unpaid principal balance, and is available for purchase by qualified bidders. The sale is marketed by both Fannie Mae and Citigroup Global Markets.
The deadline for bids is set at Nov. 1, 2016.
“We are pleased to offer this first sale of reperforming loans,” said Bob Ives, vice president of retained portfolio asset management, Fannie Mae. “This sale will support our efforts to reduce the size of the company’s balance sheet.”
The terms of Fannie Mae’s reperforming loan sale require the buyer to offer loss mitigation options designed to be sustainable, to any borrower who may re-default after the sale, and prohibit the buyer from “walking away” from any home that might become vacant.