Fannie Mae announced on Wednesday that it will make available for purchase to qualified bidders a bundle of approximately 3,200 non-performing single-family residential mortgage loans (NPLs) totaling about $786 million in unpaid principal balance (UPB).
This will be Fannie Mae's first bulk sale of NPLs as the GSEs push to clear deeply delinquent loans from their mortgage portfolios at the behest of their conservator, the Federal Housing Finance Agency (FHFA).
"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," said Joy Cianci, Fannie Mae’s SVP for Credit Portfolio Management. "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."
The loans are being offered in two pools, one with $180 million in UPB and one with $606 million in UPB. The marketing for the NPL sale begins Wednesday and bids are due on May 6. Fannie Mae said it expects the sale to close in mid to late June. Bank of America Merrill Lynch, Credit Suisse, and The Williams Capital Group are acting as advisers for the NPL sale, according to Fannie Mae's announcement.
Fannie Mae's fellow GSE, Freddie Mac, has already conducted three bulk NPL sales in the last eight months totaling approximately $1.97 billion in UPB. The last such sale by Freddie Mac, completed on March 25, was its largest bulk NPL sale ever – it included nearly 5,400 loans totaling $985 million in UPB.
Interested bidders can register to receive ongoing announcements regarding the sale, training, or other information by clicking here. That site will also include information about specific pools available for purchase.
Bidders must meet qualifications set forth by FHFA. In early March, FHFA issued enhanced requirements for the buyers and servicers of Agency non-performing loans that call for bidders to identify servicing partners at the time of qualification and complete a questionnaire to demonstrate a record of successful loan resolution through foreclosure alternatives, since many of the loans being sold in these portfolios are deeply delinquent – two years or more delinquent in some cases. As part of the new requirements, servicers who purchase non-performing Agency loans must apply a "waterfall of resolution tactics" before resorting to foreclosure. When foreclosure cannot be avoided, the loan owner is required to market the property exclusively to owner-occupants and non-profits before seeking out investors to purchase it.