The Federal Housing Finance Agency (FHFA) today released the latest report on the sale of non-performing loans (NPLs) by Fannie Mae and Freddie Mac (the Enterprises). The Enterprise Non-Performing Loan Sales Report includes sales information about NPLs sold through June 30, 2020 and reflects borrower outcomes on NPLs sold through December 31, 2019 and reported through June 30, 2020.
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 report shows that from program inception in 2014 through June 30, 2020, the Enterprises sold 128,471 NPLs with a total unpaid principal balance (UPB) of $24.1 billion. From December 31, 2015 to June 30, 2020, the number of loans one or more years delinquent held in the Enterprises’ portfolios decreased by 70 percent.
NPL Sales Highlights:
- NPLs sold had an average delinquency of 2.9 years and an average loan-to-value ratio of 91 percent.
- The average delinquency for pools sold ranged from 1.4 years to 6.2 years.
- NPLs in New Jersey, New York and Florida represented nearly half (44 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.
- Fannie Mae sold 86,216 loans with an aggregate UPB of $15.8 billion, an average delinquency of 3.0 years, and an average LTV of 89 percent.
- Freddie Mac sold 42,255 loans with an aggregate UPB of $8.4 billion, an average delinquency of 2.8 years, and an average LTV of 96 percent.
Borrower Outcomes Highlights:
- The borrower outcomes in the report are based on 124,036 NPLs that were settled by December 31, 2019 and reported as of June 30, 2020.
- 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 (39.1 percent foreclosure avoided versus 16.1 percent for vacant properties).
- NPLs on vacant homes had a much higher rate of foreclosure, more than double the foreclosure rate of borrower-occupied properties (76.4 percent foreclosure versus 33.6 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.
FHFA will continue to provide reporting on NPL sales borrower outcomes on an ongoing basis.
Read the Non-Performing Loan Sales Report.
For more information, visit the NPL page on FHFA.gov.