Washington, DC – The Federal Housing Finance Agency (FHFA) today released its third 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 and outcomes for borrowers as of 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. An initial report of NPL sales and borrower outcome data was released in June 2016 and the second report was released in November 2016.
The third report shows that, through December 2016, the Enterprises had sold more than 72,502 NPLs representing a total unpaid principal balance of $14.2 billion.
- NPLs sold had an average delinquency of 3.4 years and an average current loan-to-value ratio of 97 percent.
- New Jersey, Florida and New York accounted for nearly half (48 percent) of the NPLs sold. These three states also accounted for 47 percent of the Enterprises’ loans that were 1 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 9 of 11 small, geographically concentrated NPL pools sold by December 31, 2016, and CLFNJ is a service provider for the tenth and eleventh pools.
The borrower outcomes in the report are based on the 45,446 NPLs that were settled by June 30, 2016 and reported through December 31, 2016. These outcomes reflect the following:
- NPLs where the home was occupied by the borrower had the highest rate of foreclosure avoidance outcomes (18.8 percent foreclosure avoided versus 10.1 percent for vacant properties).
- NPLs where the property is vacant had a much higher rate of foreclosure, nearly double the foreclosure rate of borrower-occupied properties (38.5 percent foreclosure versus 16.6 percent for borrower occupied properties). Foreclosure outcomes for 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‐three percent of NPLs that have been with the new servicers the longest (1,737 NPLs for 20 months) avoided foreclosure, compared to 23 percent of the benchmark NPLs.
- Eleven percent of the permanent modifications provided arrearage and/or principal forgiveness. The average forgiveness earned per loan was $35,385, with the potential to earn an average forgiveness of $73,695 in total.
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