Fannie Mae Commences NPL Sell-Off

Posted by Patrick Barnard on April 08, 2015 No Comments
Categories : Mortgage Servicing

Fannie Mae is starting to sell off its nonperforming loans (NPLs) to investors.

This week, the government-sponsored enterprise (GSE) announced that it is putting a pool of about 3,200 NPLs, totaling $786 million in unpaid principal balance (UPB), up for bids.

This will mark the company's first bulk-sale of NPLs since it announced its intention to divest itself of nonperforming securities for the sake of reducing taxpayer risk.

Last week, sister GSE Freddie Mac announced that it had recently sold off three pools of NPLs with a UPB of $985 million to GCAT Management Services.

The loans, which were sold via auction, are expected to transfer in early May.

Fannie's first sale of NPLs is being handled in collaboration with Bank of America Merrill Lynch, Credit Suisse and The Williams Capital Group, the company says in a release.

‘We are pleased to offer this first transaction, which will help us reduce the number of seriously delinquent loans we own while providing additional foreclosure prevention opportunities,’ says Joy Cianci, senior vice president of credit portfolio management for Fannie Mae, in a release. ‘We plan to build these sales into a programmatic offering and look forward to working with a diverse range of potential buyers over time, including smaller investors, nonprofit organizations and minority- and women-owned businesses.’

Recently, the Federal Housing Finance Agency (FHFA), overseer of the GSEs, issued new rules requiring investors that purchase the NPLs to try harder to reach solutions with borrowers that allow them to keep their homes and avoid foreclosure – whether that means extending loan terms, writing-down principal or pursuing a short sale.

When a foreclosure cannot be prevented, the FHFA guidelines require the loan owner to market the property to owner-occupants and nonprofits exclusively before offering it to investors – similar to Fannie Mae's FirstLook program.

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