SOURCE: Freddie Mac

Freddie Mac

March 23, 2016 16:20 ET

Freddie Mac Sells $1.4 Billion of Seriously Delinquent Loans

Winning Bidders Include Non-Profit and For-Profit Entities

MCLEAN, VA--(Marketwired - Mar 23, 2016) - Freddie Mac (OTCQB: FMCC) today announced it sold via auction 6,816 deeply delinquent non-performing loans (NPLs) serviced by Nationstar Mortgage, LLC from its mortgage investment portfolio. The sale consisted of two transactions: an Extended Timeline Pool Offering (EXPO®) on March 10, 2016 and a Standard Pool Offering (SPO®) on February 25, 2016. The transactions are expected to settle in April and May 2016, and servicing will be transferred post-settlement. Community Loan Fund of New Jersey, Inc., a non-profit, was the winning bidder on the two EXPO pools and two for-profit entities were the winning bidders on the SPO pools. Freddie Mac, through its advisors, began marketing the transaction on January 21, 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 seven separate pools of mortgage loans. Two of the pools were EXPO pools consisting of Florida mortgage loans and targeting participation by smaller investors, including non-profits and MWOBs, with an extended bidding timeline and limited pool sizes. Five of the pools were geographically diverse SPO pool offerings. Investors had the flexibility to bid on one or multiple pools, or bid on the aggregate of the SPO pools.

The loans have been delinquent for almost four 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 34 percent of the aggregate pool balance. The aggregate pool is geographically diverse and has a loan-to-value ratio of approximately 97 percent, based on BPO (Broker Price Opinion).

The pools, winning bidders and cover bid prices (second highest bids) are summarized below:

Table 1: EXPO Pool Offerings

Description   Pool #1   Pool #2
Unpaid Principal Balance   $27.0 million   $37.6 million
Loan Count   113   183
CLTV Range   All   All
BPO CLTV   100   98
Average Months Delinquent   57   51
Average Loan Balance ($000)   239.0   205.5
Geographical Distribution   Miami, FL   Tampa, FL
Winning Bidder   Community Loan Fund of New Jersey, Inc.   Community Loan Fund of New Jersey, Inc.
Cover Bid Price
(second-highest bid price)
  Around $70   Around $70
         

Table 2: SPO Pool Offerings

Description   Pool #1   Pool #2   Pool #3   Pool #4     Pool #5
Unpaid Principal Balance   $132.8 million   $335.7 million   $354.1 million   $373.9 million   $165.0 million
Loan Count   689   1,720   1,537   1,745   829
CLTV Range   Less than 90   Less than 90   Greater than or equal to 90 and less than 110   Greater than or equal  110   All
BPO CLTV   73   73   100   138   130
Average Months Delinquent   44   45   47   47   41
Average Loan Balance ($000)   192.8   195.2   230.4   214.3   199.0
Geographical Distribution   National   National   National   National   National
Winning Bidder   LSF9 Mortgage Holdings, LLC   LSF9 Mortgage Holdings, LLC   LSF9 Mortgage Holdings, LLC   Rushmore Loan Management Services, LLC   Rushmore Loan Management Services, LLC
Cover Bid Price
(second-highest bid price)
  Mid $80s   Low $80s   Mid $60s   High $40s   Low $50s
                     

Last year, Freddie Mac's regulator, the Federal Housing Finance Agency, announced enhanced requirements for NPL sales. Additional loss mitigation standards that apply to all the winning bidders on this sale were included for loans with proprietary modifications resulting in a temporary reduction in borrower payments. Specifically, these additional standards include annual rate increases and a cap on the permanent rate after the initial payment reduction period. These changes encourage sustainable modifications that have the potential to give more borrowers the opportunity for home retention.

Advisors to Freddie Mac on the transaction were Wells Fargo Securities, Credit Suisse Securities and The Williams Capital Group, a minority-owned business.

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.