Freddie Mac has announced the sale, via auction, of 679 deeply delinquent non-performing residential first lien loans (NPLs) from its mortgage-related investments portfolio. The loans, with a balance of approximately $104 million, are currently serviced by Specialized Loan Servicing LLC and NewRez LLC, d/b/a Shellpoint Mortgage Servicing. The transaction is expected to settle in June 2024.
The sale is part of Freddie Mac’s Standard Pool Offerings (SPO). Freddie Mac, through its advisors, began marketing the transaction on March 6, 2024, to potential bidders, including non-profits and Minority, Women, Disabled, LGBTQ+, Veteran or Service-Disabled Veteran-Owned Businesses (MWDOBs), neighborhood advocacy organizations and private investors active in the NPL market.
For the SPO offering, the loans were offered as one pool of mortgage loans. The pool consists of mortgage loans secured by geographically diverse properties.
Given the delinquency status of the loans, the borrowers have likely been evaluated previously for loss mitigation, including modification or other alternatives to foreclosure, or are in foreclosure. Mortgages that were previously modified and subsequently became delinquent comprise approximately 47% of the aggregate pool balance. Additionally, 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.
Advisors to Freddie Mac on the transaction included BofA Securities Inc. and First Financial Network Inc., a woman-owned business.
A GSE’s history in NPLs
Freddie Mac’s seasoned loan offerings includes sales of NPLs, securitizations of re-performing loans (RPLs) and structured RPL transactions.
Since 2011, Freddie Mac has sold $10.2 billion of NPLs and securitized approximately $78.3 billion of RPLs consisting of $30.4 billion via fully guaranteed MBS, $35.5 billion via the Seasoned Credit Risk Transfer (SCRT) program, and $12.4 billion via the Seasoned Loans Structured Transaction (SLST) program. Requirements guiding the servicing of these transactions are focused on improving borrower outcomes and stabilizing communities.
Building upon new leadership
Freddie Mac recently announced the appointment of President Michael T. Hutchins to the additional role of Interim CEO as the company continues its search for a permanent CEO. Hutchins will also become a member of Freddie Mac’s Board of Directors. Hutchins was named President of the GSE in 2020, and is a member of the company’s Senior Operating Committee. He will continue serving as President, and will took on the role of Interim CEO and Board member effective March 16, following the departure of CEO Michael J. DeVito, who stepped down on March 15.
“Mike Hutchins is a proven leader who brings a deep understanding of every aspect of Freddie Mac to the role of Interim CEO,” said Lance Drummond, non-executive Chair of Freddie Mac’s Board of Directors. “In addition to his knowledge of Freddie Mac, Mike’s decades of experience in housing and financial services is invaluable as the company navigates a challenging market to Make Home Possible for borrowers and renters across the nation.”
