SOURCE: Freddie Mac

Freddie Mac

October 05, 2016 10:34 ET

Freddie Mac Sells $1 Billion of Seriously Delinquent Loans

MCLEAN, VA--(Marketwired - Oct 5, 2016) -  Freddie Mac (OTCQB: FMCC) today announced it sold via auction 5,364 deeply delinquent non-performing loans (NPLs) from its mortgage-related investments portfolio. The loans are currently serviced by either Wells Fargo Bank, N.A. or Ditech Financial, LLC. The transaction is expected to settle in December 2016, and servicing will be transferred post-settlement. The sale is part of Freddie Mac's Standard Pool Offerings (SPO®). Freddie Mac, through its advisors, began marketing the transaction on September 8, 2016, to potential bidders, including minority and women-owned businesses (MWOBs), non-profits, neighborhood advocacy funds and private investors active in the NPL market.

The loans were offered as four separate pools of geographically diverse mortgage loans. Investors had the flexibility to bid on each pool individually and/or a combination of pools. All four pools were sold at a weighted average price in the mid-70s as a percent of the total unpaid principal balance. 

The loans have been delinquent for over two years, on average. Given the deep delinquency status of the loans, the borrowers have likely been evaluated previously for or are already in various stages of loss mitigation, including modification or other alternatives to foreclosure, or are in foreclosure. Mortgages that were previously modified and subsequently became delinquent comprise approximately 47.5 percent of the aggregate pool balance. The aggregate pool is geographically diverse and has a loan-to-value ratio of approximately 86 percent, based on Broker Price Opinion (BPO).

The pools and winning bidders are summarized below:

                 
Description   Pool #1   Pool #2   Pool #3   Pool #4
Unpaid Principal Balance   $292.7 million   $220.0 million   $227.2 million   $222.8 million
Loan Count   1813   1283   1113   1155
CLTV Range   Less than 90   Less than 90   Greater than or equal to 90 and less than 110   Greater than or equal 110
BPO CLTV   71   70   99   136
Average Months Delinquent   29   21   28   29
Average Loan Balance ($000)   161.5   171.5   204.2   192.9
Geographical Distribution   National   National   National   National
Winning Bidder   Pretium Mortgage Credit Partners I Loan Acquisition, LP   Pretium Mortgage Credit Partners I Loan Acquisition, LP   Upland Mortgage Acquisition Company II, LLC   Rushmore Loan Management Services LLC
Cover Bid Price
(second-highest bid price)
  Mid-$80s   Mid-$80s   Around $70   Mid-$40s
                 

Advisors to Freddie Mac on the transaction were Wells Fargo Securities, LLC and First Financial Network, Inc., a woman-owned business.

Through the first half of 2016, Freddie Mac sold $5.3 billion in NPLs as part of its strategy to reduce the less liquid assets in its mortgage-related investments portfolio. Requirements guiding the servicing of these transactions are focused on improving borrower outcomes and stabilizing communities. In April 2016, Freddie Mac's regulator, the Federal Housing Finance Agency, announced enhanced requirements for NPL sales. Additional information about the company's NPL sales is at http://www.freddiemac.com/npl/.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four home borrowers and is the largest source of financing for multifamily housing. Additional information is available at FreddieMac.com, Twitter @FreddieMac and Freddie Mac's blog at FreddieMac.com/blog.