Freddie Mac Sells $1 Billion of Seriously Delinquent Loans

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Freddie Mac Sells $1 Billion of Seriously Delinquent Loans

Freddie Mac Sells $1 Billion of Seriously Delinquent Loans

MCLEAN, VA–(Marketwired – Oct 5, 2016) –  Freddie Mac (OTCQB: FMCC) today announced it sold via auction 5,364 deeply delinquent non-performing loans (NPLs) from its mortgage-related investments portfolio. The loans are currently serviced by either Wells Fargo Bank, N.A. or Ditech Financial, LLC. The transaction is expected to settle in December 2016, and servicing will be transferred post-settlement. The sale is part of Freddie Mac’s Standard Pool Offerings (SPO®). Freddie Mac, through its advisors, began marketing the transaction on September 8, 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 four separate pools of geographically diverse mortgage loans. Investors had the flexibility to bid on each pool individually and/or a combination of pools. All four pools were sold at a weighted average price in the mid-70s as a percent of the total unpaid principal balance.

The loans have been delinquent for over two 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 47.5 percent of the aggregate pool balance. The aggregate pool is geographically diverse and has a loan-to-value ratio of approximately 86 percent, based on Broker Price Opinion (BPO).

The pools and winning bidders are summarized below:

Description Pool #1 Pool #2 Pool #3 Pool #4
Unpaid Principal Balance $292.7 million $220.0 million $227.2 million $222.8 million
Loan Count 1813 1283 1113 1155
CLTV Range Less than 90 Less than 90 Greater than or equal to 90 and less than 110 Greater than or equal 110
BPO CLTV 71 70 99 136
Average Months Delinquent 29 21 28 29
Average Loan Balance ($000) 161.5 171.5 204.2 192.9
Geographical Distribution National National National National
Winning Bidder Pretium Mortgage Credit Partners I Loan Acquisition, LP Pretium Mortgage Credit Partners I Loan Acquisition, LP Upland Mortgage Acquisition Company II, LLC Rushmore Loan Management Services LLC
Cover Bid Price
(second-highest bid price)
Mid-$80s Mid-$80s Around $70 Mid-$40s

Advisors to Freddie Mac on the transaction were Wells Fargo Securities, LLC and First Financial Network, Inc., a woman-owned business.

Through the first half of 2016, Freddie Mac sold $5.3 billion in NPLs as part of its strategy to reduce the less liquid assets in its mortgage-related investments portfolio. Requirements guiding the servicing of these transactions are focused on improving borrower outcomes and stabilizing communities. In April 2016, Freddie Mac’s regulator, the Federal Housing Finance Agency, announced enhanced requirements [PDF] for NPL sales. Additional information about the company’s NPL sales is at http://www.freddiemac.com/npl/.

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