GSEs Sold More than $18 Billion in NPLs in First Half of 2018


Government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac sold 98,061 non-performing loans (NPLs) with a total unpaid principal balance (UPB) of $18.7 billion in the first half of 2018, the Federal Housing Finance Agency, regulator of the GSEs, says in a recent report.

That’s a total of 7,140 NPLs – compared with a total of 18,419 total NPLs sold in all of 2017.

The NPLs sold through the first half – part of the GSEs’ effort to reduce risky assets in their portfolios – had an average delinquency of 3.1 years and an average current loan-to-value ratio of 95% (not including capitalized arrearages).

New Jersey, New York, and Florida accounted for 46% of the NPLs sold. These three states also accounted for 47% of the GSE loans that were one year or more delinquent as of December 31, 2014, prior to the start of NPL programmatic sales in 2015.

Since the end of 2015 to June 30, 2018, the number of loans one or more years delinquent held in the GSEs’ portfolio decreased by 61%, the FHGFA reports.

All together more than 88,200 NPLs were settled by December 31, 2017.

As of June 30, 62% of these NPLs had been resolved.

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 (28.2% foreclosure avoided versus 12.7% for vacant properties).

NPLs on vacant homes had a much higher rate of foreclosure, more than double the foreclosure rate of borrower-occupied properties (65.9% foreclosure versus 28.6% for borrower occupied properties).

Twenty percent of the permanent modifications of NPLs incorporated arrearage and/or principal forgiveness. The average forgiveness earned per loan to date was $55,280 (with the potential to earn an average forgiveness of $77,491).

For the full report, click here.

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