Freddie Mac Sells $1.2 Billion in NPLs

Rhea-AI Summary

Freddie Mac (FMCC) announced the auction sale of 7,186 non-performing residential first lien loans (NPLs) valued at approximately $1.2 billion. The sale is part of Freddie Mac's Standard Pool Offerings and is expected to settle in December 2021. Loans were marketed to diverse bidders from September 16, 2021. Approximately 64% of the loans had prior modifications but became delinquent. The transaction aims to reduce less-liquid assets and improve borrower outcomes. Notably, Freddie Mac has sold over $8 billion in NPLs to date.

Positive

• Sale of 7,186 NPLs valued at $1.2 billion expected to improve liquidity.
• Focus on diverse bidder participation, including MWDOBs.
• Freddie Mac has successfully sold over $8 billion in NPLs to date.

Negative

• Approximately 64% of the loans were previously modified and are now delinquent, indicating potential ongoing risks.

Awards 4 SPO Pools to 3 Winners

MCLEAN, Va., Oct. 19, 2021 (GLOBE NEWSWIRE) -- Freddie Mac (OTCQB: FMCC) today announced it sold via auction 7,186 non-performing residential first lien loans (NPLs) from its mortgage-related investments portfolio. The loans, with a balance of approximately $1.2 billion, are currently serviced by Specialized Loan Servicing LLC, Select Portfolio Servicing, Inc., and NewRez LLC, d/b/a Shellpoint Mortgage Servicing. The transaction is expected to settle in December 2021. The sale is part of Freddie Mac’s Standard Pool Offerings (SPO^®). Freddie Mac, through its advisors, began marketing the transaction on September 16, 2021 to potential bidders, including non-profits and Minority, Women, Disabled, LGBT, Veteran or Service-Disabled Veteran-Owned Businesses (MWDOBs), neighborhood advocacy organizations and private investors active in the NPL market. Bids for the upcoming Extended Timeline Pool Offering (EXPO), which is a smaller sized pool of loans, are due from qualified bidders by November 16, 2021.

For the SPO^® offerings, the loans were offered as four separate pools of mortgage loans. The four pools consist of mortgage loans secured by geographically diverse properties. Investors had the flexibility to bid on each pool individually and/or any combination of pools.

Given the delinquency status of the loans, the borrowers have likely been evaluated previously for loss mitigation, including modification or other alternatives to foreclosure, or are in foreclosure. Mortgages that were previously modified and subsequently became delinquent comprise approximately 64 percent of the aggregate pool balance. Additionally, purchasers are required to honor the terms of existing loss mitigation agreements and solicit distressed borrowers for additional assistance except in limited cases and ensure all pending loss mitigation actions are completed.

The SPO pools and winning bidders are summarized below:

Description	Pool #1	Pool #2	Pool #3	Pool #4
Unpaid Principal Balance	$320.1 million	$503.6 million	$161.8 million	$197.2 million
Loan Count	1989	2808	862	1527
BPO-weighted* CLTV (in %)	66	42	68	64
Average Months Delinquent	23	24	34	36
Average Loan Balance (in $000s)	160.9	179.3	187.7	129.2
Geographical Distribution	National	National	National	National
Winning Bidder	VRMTG ACQ, LLC	Truman 2021 SC9, LLC	VRMTG ACQ, LLC	MCLP Asset Company, Inc.
Cover Bid Price (% of UPB) (second-highest bid price)	100 area	Low-Mid 110s	Mid 100s	Low-Mid 90s

*Broker Price Opinions (BPOs)

Advisors to Freddie Mac on the transaction are Citigroup Global Markets Inc and First Financial Network, Inc., a woman-owned business.

Freddie Mac’s seasoned loan offerings are focused on reducing less-liquid assets in the company’s mortgage-related investments portfolio in an economically sensible way. This includes sales of NPLs, securitizations of re-performing loans (RPLs) and structured RPL transactions.

To date, Freddie Mac has sold over $8 billion of NPLs and securitized approximately $75 billion of RPLs consisting of $30 billion via fully guaranteed PCs, $33 billion via Seasoned Credit Risk Transfer (SCRT) senior/sub securitizations, and over $11 billion via Seasoned Loans Structured Transaction (SLST) offerings. Requirements guiding the servicing of these transactions are focused on improving borrower outcomes and stabilizing communities. Additional information about Freddie Mac’s seasoned loan offerings is available at http://www.freddiemac.com/seasonedloanofferings/

Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we’ve made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.

MEDIA CONTACT: Fred Solomon
703-903-3861
Frederick_Solomon@freddiemac.com 

FAQ

What is the value of the loans sold by Freddie Mac (FMCC) on October 19, 2021?

Freddie Mac sold 7,186 non-performing loans valued at approximately $1.2 billion.

When is the settlement date for the NPL sale by Freddie Mac (FMCC)?

The settlement date for the NPL sale is expected to be in December 2021.

Who are the servicers for the loans sold by Freddie Mac (FMCC)?

The loans are serviced by Specialized Loan Servicing LLC, Select Portfolio Servicing, Inc., and NewRez LLC.

What percentage of the loans sold by Freddie Mac (FMCC) were previously modified?

Approximately 64% of the loans had been previously modified and became delinquent.

What are Freddie Mac's plans for reducing less-liquid assets?

Freddie Mac aims to reduce less-liquid assets through sales of NPLs, securitizations of re-performing loans (RPLs), and structured RPL transactions.