FHFA: GSEs Sell $25 Billion in NPLs through 3Q
The Federal Housing Agency reported Fannie Mae and Freddie Mac sold nearly 131,000 non-performing loans with a total unpaid balance of $24.5 billion through June 30.
The agency’s Enterprise Non-Performing Loan Sales Report said the loans included in the NPL sales had an average delinquency of 2.9 years and an average current mark-to-market loan-to-value ratio of 91 percent (not including capitalized arrearages).
The figures represent totals from the programs inception in 2014 through June 30.
However, FHFA also reported loans that have been delinquent for more than a year in the GSEs’ portfolios totaled 331,148 in the first six months of 2021–the highest point since 2015. At the end of 2020, the total was 79,591; two years ago, it was 51,512. The sharp increase occurred amid federal and other mortgage forbearance programs.
Other report findings:
–The average delinquency for pools sold ranged from 1.4 years to 6.2 years.
–Fannie Mae has 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 has sold 44,592 loans with an aggregate UPB of $8.7 billion, an average delinquency of 2.8 years and an average LTV of 95 percent.
–NPLs in New Jersey, New York and Florida represented nearly half (43 percent) of the NPLs sold.
–Borrower outcomes, based on 128,087 NPLs that were settled by December 31, 2020 and reported as of June 30, 2021, found 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 (41.2 percent foreclosure avoided versus 17.1 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 (77.4 percent foreclosure versus 33 percent for borrower occupied properties). Foreclosures on vacant homes typically improve neighborhood stability and reduce blight as the homes are sold or rented to new occupants.
–The average UPB of NPLs sold was $187,588.
FHFA said sale of NPLs reduces the number of delinquent loans in the Enterprises’ portfolios and transfers credit risk to the private sector. FHFA and the Enterprises impose requirements on NPL buyers designed to achieve more favorable outcomes for borrowers than foreclosure.