Freddie Mac Announces Winning Bidders For Portfolio Of Delinquent Loans

Government-sponsored enterprise Freddie Mac recently announced that it had selected winning bidders in the sale of about $1.1 billion in nonperforming loans (NPLs) that are being serviced by Ocwen.

The sale included five separate pools with a total of 5,208 deeply delinquent NPLs.

LSF9 Mortgage Holdings, a private equity trust operated by Lone Star Funds, was the winning bidder for three of the pools, while Pretium Mortgage Credit Partners and OSAT Sponsor II bought the other two.

The loans are expected to transfer in October. The transfer of these loans will be highly sensitive as many are already in various stages of loss mitigation. Most are more than three years delinquent, according to Freddie Mac.

This closed Freddie Mac's sixth NPL auction of the year. Freddie Mac and its sister company, Fannie Mae, started to sell off their NPLs to investors earlier this year in an effort to divest themselves of certain nonperforming assets and in order to reduce taxpayer risk.

In April, Freddie Mac auctioned a $233 million pool of NPLs serviced by Ocwen.

The sales are, in part, a result of Ocwen's recent efforts to reorganize after a spate of regulatory enforcement actions that resulted in the company deciding to discontinue servicing agency-backed mortgages.

In addition, Freddie Mac announced in September that it was auctioning a portfolio of deeply delinquent NPLs with about $327 million in unpaid principal balance serviced by JP Morgan Chase Bank NA.

That sale is expected to settle in December and is the seventh NPL auction for the GSE as it continues to divest itself of its poorly performing loans to reduce taxpayer risk and bring more private capital back to the mortgage market.

Freddie Mac recently announced that it is now selling its NPLs in smaller pools and marketing them for a longer period of time so as to give smaller investors a crack at them. This is being done through the company's Extended Timeline Pool Offering program. Offering the NPLs in smaller pools and marketing them for longer will give smaller investors a better chance of coming up with the funds needed to buy them, the company says.

The company also recently launched a new Web page for investors providing information on future NPL sales, located at

Earlier this year, the Federal Housing Finance Agency (FHFA), overseer of the GSEs, issued new rules requiring investors that purchase the NPLs to try harder to reach solutions with borrowers that allow them to keep their homes and avoid foreclosure – whether that means extending loan terms, writing-down principal or pursuing a short sale.

When a foreclosure cannot be prevented, the FHFA guidelines require the loan owner to market the property to owner-occupants and nonprofits exclusively before offering it to investors – similar to Fannie Mae's FirstLook program.


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