Fannie Mae began its official sale of Non-Performing Loans (NPLs) in April 2015 and since then has sold thousands of seriously delinquent loans. These sales are conducted based on guidelines provided by the Federal Housing Finance Agency (FHFA) and require buyers, as articulated on Fannie Mae’s website, “to offer loan modifications to borrowers and provide foreclosure alternatives whenever possible.”
If a foreclosure is inevitable, the priority should be given to owner-occupants trying to salvage their homes and non-profit organizations that can help restore stability to neighborhoods by reducing foreclosures and providing affordable housing to deserving candidates. These guidelines along with an increase in NPL sales have positively impacted the housing market by reducing distressed home sales across the nation.
On February 10, Fannie Mae announced the winners of its fourth NPL sale that involved almost 6,500 seriously delinquent loans valued at a total of $1.32 billion in unpaid principal balance (UPB). These account for the largest NPL sales, to date, with reference to number of loans and amount of UPB. All these loans have been delinquent for approximately six years.
Following a set pattern, Fannie Mae segregated the NPLs into four large and small pools and entered them for bidding on January 12; this was done with support from Bank of America Merrill Lynch and First Financial Network, Inc.
The winners for this recent sale were:
- Canyon Partners (Carlsbad Funding Mortgage Loan Acquisition): First pool
- Pretium Mortgage Credit Partners 1 Loan Acquisition: Second pool
- Goldman Sachs: Third and Fourth pools
A different group of bids are due on February 18 for the organization’s “second Community Impact Pool,” the first of which was sold in July 2015. The Community Impact Pool contains a lower number of loans, mostly from the same geographical area, and is targeted at non-profit organizations, small investors and minority- and women-owned businesses.
Foreclosures often force families to move out of their familiar neighborhoods but considering the impact these NPL sales are having on the housing market, we can be cautiously hopeful that the market will return to more stable grounds, allowing more individuals to stay in their homes.