Freddie Mac Sells $18 Million of NPLs in Extended Timeline Pool

Rhea-AI Summary

On October 19, 2020, Freddie Mac (OTCQB: FMCC) announced the auction sale of 101 non-performing residential first lien loans (NPLs) valued at $18.4 million to VRMTG ACQ, LLC. This transaction is part of Freddie Mac’s Extended Timeline Pool Offering and is expected to settle in December 2020. The loans, which have an average delinquency of 22 months, include modified mortgages that are now delinquent. Freddie Mac has sold over $8.4 billion in NPLs to date, focusing on reducing less-liquid assets in its mortgage-related investments portfolio.

Positive

• Completion of the auction sale of 101 NPLs could stabilize Freddie Mac's balance sheet by reducing less-liquid assets.
• The sale promotes commitments to minority and women-owned businesses, enhancing corporate social responsibility.

Negative

• The average loan delinquency of 22 months may indicate ongoing risks in borrower repayments.
• The sale of non-performing loans reflects underlying asset quality issues that could impact Freddie Mac's long-term financial health.

MCLEAN, Va., Oct. 19, 2020 (GLOBE NEWSWIRE) -- Freddie Mac (OTCQB: FMCC) today announced it sold via auction 101 non-performing residential first lien loans (NPLs) serviced by Specialized Loan Servicing LLC to VRMTG ACQ, LLC, a minority and woman owned business. The sale is part of Freddie Mac’s Extended Timeline Pool Offering (EXPO^®) and the transaction is expected to settle in December 2020. Freddie Mac, through its advisors, began marketing the transaction on September 8, 2020 to potential bidders, including non-profit organizations and Minority, Women, Disabled, LGBT, Veteran or Service-Disabled Veteran-Owned Businesses (MWDOBs), neighborhood advocacy organizations and private investors active in the NPL market.

Given the delinquency status of the loans, the borrowers have likely been previously evaluated for or are already in various stages of loss mitigation, including modification or other alternatives to foreclosure, or are in foreclosure. Mortgages that were previously modified and subsequently became delinquent comprise approximately 73.6 percent of the pool balance. Also, 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 pool and winning bidder are summarized below:

Description	EXPO Pool
Unpaid Principal Balance	$18.4 million
Loan Count	101
CLTV Range (in %)	All
BPO-weighted* CLTV (in %)	66
Average Months Delinquent	22
Average Loan Balance (in $000s)	$185.0
Geographical Distribution	Florida
Winning Bidder	VRMTG ACQ, LLC
Cover Bid Price (% of UPB) (second-highest bid price)	Low 80s Area

*Broker Price Opinions (BPOs)

Advisors to Freddie Mac on the transaction are Wells Fargo Securities, LLC 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 $8.4 billion of NPLs and securitized more than $66.5 billion of RPLs consisting of (i) $29.0 billion in fully guaranteed PCs, (ii) $28.3 billion in Seasoned Credit Risk Transfer (SCRT) senior/sub securitizations, and (iii) $9.3 billion in Seasoned Loan Structured Transaction (SLST) offerings. Requirements guiding the servicing of these transactions are focused on improving borrower outcomes and stabilizing communities. Additional information about the company's seasoned loan offerings can be found 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 loans did Freddie Mac sell on October 19, 2020?

Freddie Mac sold 101 non-performing residential first lien loans valued at $18.4 million.

Who was the winning bidder for the Freddie Mac loan auction?

The winning bidder for the auction was VRMTG ACQ, LLC.

What is the average delinquency period of the loans sold by Freddie Mac?

The average delinquency period of the loans sold is 22 months.

What is Freddie Mac's strategy regarding non-performing loans?

Freddie Mac aims to reduce less-liquid assets through sales of non-performing loans and securitizations.

How much non-performing loans has Freddie Mac sold to date?

To date, Freddie Mac has sold over $8.4 billion in non-performing loans.