The Federal Housing Finance Agency (FHFA) today released its fourth 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 Reportincludes information about NPLs sold through June 30, 2017. It reflects borrower outcomes as of June 30, 2017, on NPLs sold through December 31, 2016. The sale of NPLs reduces the number of severely delinquent loans in the Enterprises’ portfolios. FHFA and the Enterprises impose requirements on NPL buyers to encourage prioritization of outcomes for borrowers other than foreclosure.
This fourth report shows that, through June 30, 2017, the Enterprises sold 82,359 NPLs representing a total unpaid principal balance (UPB) of $16 billion.
- NPLs sold had an average delinquency of 3.3 years and an average current loan-to-value ratio of 97 percent.
- NPLs in New Jersey, New York and Florida represented nearly half (47 percent) of the NPLs sold. These three states also accounted for 47 percent of the Enterprises’ loans that were one year or more delinquent as of December 31, 2014.
- A nonprofit organization, Community Loan Fund of New Jersey (CLFNJ), along with its affiliate, New Jersey Community Capital, was the winning bidder on 10 of 12 small, geographically concentrated NPL pools sold by June 30, 2017.
The borrower outcomes in the report are based on the 69,804 NPLs that were settled by December 31, 2016 and reported through June 30, 2017. These outcomes reflect the following:
- NPLs on homes occupied by borrowers had the highest rate of foreclosure avoidance outcomes (21.2 percent foreclosure avoided versus 9.9 percent for vacant properties).
- NPLs on vacant homes had a much higher rate of foreclosure, nearly double the foreclosure rate of borrower-occupied properties (47.8 percent foreclosure versus 19.3 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.
- Compared to a benchmark of similarly delinquent Enterprise NPLs that were not sold, foreclosures avoided for sold NPLs were higher than the benchmark. Thirty‐six percent of NPLs that have been with the new servicers the longest (1,737 NPLs with new servicers for 26 months) avoided foreclosure, compared to 24 percent of the benchmark NPLs.
- Fourteen percent of the permanent modifications of NPLs provided arrearage and/or principal forgiveness. The average forgiveness earned per loan to date was $30,443 (with the potential to earn an average forgiveness of $60,586).
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