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INVESTMENT GOVERNMENT PROPERTY PRESERVATION TECH
FHFA
UPDATES GSE
NONPERFORMING
LOAN SALES
e Federal Housing Finance Agency
(FHFA) has released the latest report on the
sale of nonperforming loans (NPLs) by Fannie
Mae and Freddie Mac (the Enterprises). e
Enterprise Nonperforming Loan Sales Report
includes information about NPLs sold through
December 31, 2019, and reflects borrower
outcomes on NPLs sold through June 30, 2019,
and reported through December 31, 2019. e
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.
is report shows that, through December
31, 2019, the Enterprises sold 126,757 NPLs
with a total unpaid principal balance (UPB) of
$23.8 billion.
NPLs sold had an average delinquency of
2.9 years and an average loan-to-value ratio of
91%. e 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%) of the
NPLs sold. ese three states accounted for
47% of the Enterprises' loans that were one year
or more delinquent as of December 31, 2014,
before 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%. Freddie Mac sold 40,541 loans with
an aggregate UPB of $8.1 billion, an average
delinquency of 2.9 years, and an average LTV
of 98%.
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 vacant homes had a much
higher rate of foreclosure, more than double
the foreclosure rate of borrower-occupied
properties (76.9% foreclosure versus 34.4% 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.
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