December 17, 2024

FHFA: Update of Enterprise Sales of Non-Performing Loans Released

The latest report on the transactions by Fannie Mae and Freddie Mac, intended to transfer credit risk and improve outcomes for borrowers, reflects a steady drop in delinquencies since the pandemic

The Federal Housing Finance Agency (FHFA) today released a report on non-performing loans (NPLs) sold by by Fannie Mae and Freddie Mac (the Enterprises) through the first half of 2024. The Enterprise Non-Performing Loan Sales Report also provides information about how NPL sales through December 31, 2023, led to better outcomes for borrowers.

Since the program’s inception in 2014, the report shows, the Enterprises have sold 171,333 NPLs with a total (UPB) of $31.4 billion through June 30, 2024.

The loans included in these NPL sales had an average delinquency of 2.8 years and an average current mark-to-market loan-to-value (LTV) ratio of 82 percent.Foreclosure was avoided for borrowers in 40 percent of 165,643 loans sold.

The report shows that the Enterprises sold 2,969 NPLs (defined as loans one year or more delinquent) during the first two quarters of 2024 ending June 30, representing an unpaid principal balance (UPB) of $500 million.

As delinquencies have eased since the COVID-19 pandemic and the implementation of new loss mitigation programs, the volume of NPL sales has also declined and stabilized since 2021, when the Enterprises sold 24,164 NPLs totaling an UPB of $4.1 billion. At June 30, loans one year or more delinquent in Enterprise portfolios totaled 36,700, an 82 percent decline from the 208,147 NPLs in portfolio at the end of 2021.

The Non-Performing Loan Sales program reduces the number of deeply 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. At Dec. 31, 2023, the Enterprises held 42,667 NPLs in portfolio, of which 7 percent were sold and settled during the first half of 2024.

Highlights of NPL Sales Between 2014 – June 30, 2024:

Borrower Outcome Highlights:

FHFA will continue to provide reporting on NPL sale borrower outcomes on an ongoing basis.

Read the latest Non-Performing Loan Sales Report. For more information, visit the NPL Sales page on FHFA.gov.

This post was originally published here.