GSEs Sell Off $30B in Non-Performing Loans

The Federal Housing Finance Agency (FHFA) has released the latest report on the sale of non-performing loans (NPLs) by Fannie Mae and Freddie Mac (the GSEs), including includes sales information about NPLs sold through June 30, 2023. Borrower outcomes reflect NPLs sold through December 31, 2022.

The sale of NPLs reduces the number of delinquent loans in the GSEs’ portfolios and transfers credit risk to the private sector. FHFA and the GSEs impose requirements on NPL buyers designed to achieve more favorable outcomes for borrowers than foreclosure.

This report shows that the Enterprises sold 163,297 NPLs with a total unpaid principal balance (UPB) of $30 billion from program inception in 2014 through June 30, 2023. The loans included in the NPL sales had an average delinquency of 2.8 years, and an average current mark-to-market loan-to-value (LTV) ratio of 84% (not including capitalized arrearages).

NPL Sales highlights include:

  • The average delinquency for pools sold ranged from 1.1 years to 6.2 years.
  • Fannie Mae has sold 112,730 loans with an aggregate UPB of $20.3 billion, an average delinquency of 2.8 years, and an average LTV of 81%.
  • Freddie Mac has sold 50,567 loans with an aggregate UPB of $9.7 billion, an average delinquency of 2.7 years, and an average LTV of 90%.
  • New York, Florida, and New Jersey accounted for 40% of NPLs sold as of June 30, 2023. These three states accounted for 47% of the Enterprises’ loans that were one year or more delinquent as of December 31, 2014. The distribution of NPL sales by state closely mirrors the distribution of the Enterprises’ one year or more delinquent loans by state prior to the start of NPL programmatic sales in 2015.

Borrower outcome highlights:

  • The borrower outcomes in the report are based on 160,576 NPLs that were settled by December 31, 2022, and reported as of June 30, 2023.
  • 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 (45.6% foreclosure avoided versus 17.9% for vacant properties).
  • NPLs on vacant homes had a much higher rate of foreclosure, more than double the foreclosure rate of borrower-occupied properties (76.4% foreclosure versus 28% 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.
  • The average UPB of NPLs sold was $184,231.

Click here for more on the FHFA’s Non‐Performing Loan Sales Report.

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Eric C. Peck

Eric C. Peck has 25-plus years’ experience covering the mortgage industry, most recently serving as Editor-in-Chief for National Mortgage Professional Magazine. He graduated from the New York Institute of Technology, where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books, and has served as Copy Editor for
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