FHFA Releases Data on GSE Non-performing Loan Sales
The Federal Housing Finance Agency released its first report providing preliminary information about sales of non-performing loans by Fannie Mae and Freddie Mac, noting the government-sponsored enterprises sold nearly 42,000 NPLs with $8.5 billion in unpaid principal balance, but resolved only 24 percent of NPLs.
The Enterprise Non-Performing Loan Sales Report (http://www.fhfa.gov/AboutUs/Reports/ReportDocuments/NPL-Sales-Report_May2016.pdf.) includes NPL sales data through May 31 and preliminary outcomes for borrowers through December 31, 2015. NPL sales reduce the number of severely delinquent loans in the GSEs’ portfolios; the rules are subject to FHFA requirements that encourage NPL buyers to prioritize outcomes for borrowers other than foreclosure.
FHFA Director Mel Watt acknowledged the data are only “preliminary” that will season as regular reports add more data. A nonprofit organization, Community Loan Fund of New Jersey, was the winning bidder on five of six small, geographically concentrated pools sold by the GSEs through May and is a service provider for the sixth pool. The outcomes in the report are based on only the 8,849 NPLs that were sold by June 30, 2015 and reflect outcomes only through December 31, 2015.
Key findings of the report:
–NPLs had an average delinquency of 3.4 years and an average current loan-to-value ratio of 98 percent.
–New Jersey, Florida and New York accounted for nearly half of the NPLs sold.–NPLs where the home is occupied by the borrower had a higher rate of foreclosure avoidance (13 percent foreclosure avoided versus 6.2 for vacant properties).
–NPLs on which the property was vacant had a much higher rate of foreclosure (21.3 percent foreclosure versus 8.5 percent for borrower occupied properties), which is viewed by FHFA as favorable in light on FHFA’s belief that foreclosure of vacant homes can improve neighborhood stability and reduce blight as the homes are sold or rented to new occupants.
–To date, only 24 percent of the 8,849 NPLs have been resolved, 12 percent without foreclosure and 12 percent through foreclosure.
–Compared to a benchmark of similarly delinquent GSE NPLs that were not sold, foreclosures for NPLs sold trended lower than the benchmark loans the GSEs did not sell (21 percent of NPLs that have been with the new servicers the longest avoided foreclosure compared to 14 percent of the benchmark NPLs).
Watt said future NPL Sales Reports are expected to be published twice each year.
