The Federal Housing Finance Agency (FHFA) today released its fifth report providing information about the sale of non-performing loans (NPLs) by Fannie Mae and Freddie Mac (the Enterprises). The Enterprise Non-Performing Loan Sales Report includes information about NPLs sold through December 31, 2017, and reflects borrower outcomes as of December 31, 2017 on NPLs sold through June 30, 2017. The 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.
This fifth report shows that, through December 31, 2017, the Enterprises sold 90,921 NPLs with a total unpaid principal balance (UPB) of $17.4 billion.
- In 2017, 18,419 NPLs were sold, compared to 44,169 sold in 2016.
- NPLs sold had an average delinquency of 3.2 years and an average current loan-to-value ratio of 95 percent.
- NPLs in New Jersey, New York and Florida represented nearly half (46 percent) of the NPLs sold. These three states accounted 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.
The borrower outcomes in the report are based on the 79,638 NPLs that were settled by June 30, 2017 and reported through December 31, 2017. These outcomes reflect the following:
- 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 (25.7 percent foreclosure avoided versus 11.5 percent for vacant properties).
- NPLs on vacant homes had a much higher rate of foreclosure, nearly double the foreclosure rate of borrower-occupied properties (59.5 percent foreclosure versus 24 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.
- Twenty one percent of the permanent modifications of NPLs provided arrearage and/or principal forgiveness. The average forgiveness earned per loan to date was $51,452 (with the potential to earn an average forgiveness of $73,361).
FHFA will continue to provide reporting on NPL sales borrower outcomes on an ongoing basis.
Link to Non-Performing Loan Sales Report
Link to NPL page on FHFA.gov