Fannie Mae and Freddie Mac have sold 117,466 nonperforming loans as of June 30, 2019, with a total unpaid balance of $22.2 billion, according to the Federal Housing Finance Agency. On average, the NPLs had a delinquency of 3 years and an average current loan-to-value ratio of 92%. Nearly half (45%) of the NPLs sold came from New Jersey, New York and Florida.
The report also surveyed borrower outcomes based on the 114,745 NPLs that settled by Dec. 31, 2018. As of June 30, 2019, 72% of those NPLs had been resolved. Foreclosure avoidances were highest when the homes were occupied by borrowers—the foreclosure rate for vacant properties was 73.4%, while the foreclosure rate for borrower-occupied properties was 31.4%. The report also compared the foreclosure rate among sold NPLs to a benchmark of similarly delinquent loans that were not sold, noting that sold NPLs resulted in fewer foreclosures.
The sale of NPLs by the GSEs is intended to help reduce the number of seriously delinquent loans Fannie and Freddie own by transferring credit risk to the private sector. The GSEs sell NPLs through national pool offerings, which include pools specifically structured to attract diverse participation by nonprofits, small investors and minority and women-owned businesses. Read the report.