FHFA: GSE Non-Performing Loan Portfolios Down 70%

The Federal Housing Finance Agency’s latest report on sale of non-performing loans by Fannie Mae and Freddie Mac showed of loans one or more years delinquent held in the Enterprises’ portfolios decreased by 70 percent.

The Enterprise Non-Performing Loan Sales Report (June 2020 NPL Sales Report (fhfa.gov)), covering sales information about NPLs sold through June 30 and reflecting borrower outcomes on NPLs sold through December 31, 2019 and reported through June 30, showed from program inception in 2014 through June 30, the Enterprises sold 128,471 NPLs with a total unpaid principal balance of $24.1 billion.

Other NPL sales highlights:

–NPLs sold had an average delinquency of 2.9 years and an average loan-to-value ratio of 91 percent.

–The average delinquency for pools sold ranged from 1.4 years to 6.2 years.

–NPLs in New Jersey, New York and Florida represented nearly half (44 percent) of the NPLs sold. These three states accounted for 47 percent of the Enterprises’ loans that were one year or more delinquent as of December 31, 2014, prior to the start of NPL program sales in 2015.

–Fannie Mae sold 86,216 loans with an aggregate UPB of $15.8 billion, an average delinquency of 3.0 years, and an average LTV of 89 percent.

–Freddie Mac sold 42,255 loans with an aggregate UPB of $8.4 billion, an average delinquency of 2.8 years, and an average LTV of 96 percent.

–NPLs on homes occupied by borrowers had the highest rate of foreclosure avoidance outcomes (39.1 percent foreclosure avoided versus 16.1 percent for vacant properties).

NPLs on vacant homes had a much higher rate of foreclosure, more than double the foreclosure rate of borrower-occupied properties (76.4 percent foreclosure versus 33.6 percent for borrower occupied properties).

FHFA said sale of NPLs reduces the number of delinquent loans in the Enterprises’ portfolios and transfers credit risk to the private sector.