FHFA: GSEs Sell $22.2B in Non-Performing Loans in 2018

The Federal Housing Finance Agency released its report 2018 Enterprise Non-Performing Loan Sales Report, showing Fannie Mae and Freddie Mac sold 117,466 NPLs with a total unpaid principal balance of $22.2 billion through Dec. 31.

The report (https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/Dec2018_NPL_Sales_Report.pdf) said NPLs sold had an average delinquency of 1.4 to 6.2 years and an average loan-to-value ratio of 92 percent. NPLs in New Jersey, New York and Florida represented nearly half (45 percent) of the NPLs sold, accounting 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.

FHFA also reported on borrower outcomes based on the 95,340 NPLs settled by June 30, 2018 and reported through December 31, 2018:

–Compared to a benchmark of similarly-delinquent Enterprise NPLs that were not sold, foreclosures avoided for sold NPLs were higher than the benchmark.

–NPLs on homes occupied by borrowers had the highest rate of foreclosure avoidance outcomes (33.5 percent foreclosure avoided versus 14.3 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 (72.9 percent foreclosure versus 32.2 percent for borrower occupied properties).

“The sale of NPLs reduces the number of delinquent loans in the Enterprises’ portfolios and transfers credit risk to the private sector,” the report said. “Foreclosures on vacant homes typically improve neighborhood stability and reduce blight as the homes are sold or rented to new occupants.”