Winning Bidders Include Non-Profit and For-Profit Entities

/EINPresswire.com/ -- MCLEAN, VA -- (Marketwired) -- 03/23/16 -- Freddie Mac (OTCQB: FMCC) today announced it sold via auction 6,816 deeply delinquent non-performing loans (NPLs) serviced by Nationstar Mortgage, LLC from its mortgage investment portfolio. The sale consisted of two transactions: an Extended Timeline Pool Offering (EXPO®) on March 10, 2016 and a Standard Pool Offering (SPO®) on February 25, 2016. The transactions are expected to settle in April and May 2016, and servicing will be transferred post-settlement. Community Loan Fund of New Jersey, Inc., a non-profit, was the winning bidder on the two EXPO pools and two for-profit entities were the winning bidders on the SPO pools. Freddie Mac, through its advisors, began marketing the transaction on January 21, 2016, to potential bidders, including minority and women-owned businesses (MWOBs), non-profits, neighborhood advocacy funds and private investors active in the NPL market.

The loans were offered as seven separate pools of mortgage loans. Two of the pools were EXPO pools consisting of Florida mortgage loans and targeting participation by smaller investors, including non-profits and MWOBs, with an extended bidding timeline and limited pool sizes. Five of the pools were geographically diverse SPO pool offerings. Investors had the flexibility to bid on one or multiple pools, or bid on the aggregate of the SPO pools.

The loans have been delinquent for almost four years, on average. Given the deep delinquency status of the loans, the borrowers have likely been evaluated previously for or are already in various stages of loss mitigation, including modification or other alternatives to foreclosure, or are in foreclosure. Mortgages that were previously modified and subsequently became delinquent comprise approximately 34 percent of the aggregate pool balance. The aggregate pool is geographically diverse and has a loan-to-value ratio of approximately 97 percent, based on BPO (Broker Price Opinion).

The pools, winning bidders and cover bid prices (second highest bids) are summarized below:

Table 1: EXPO Pool Offerings

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                Description                     Pool #1          Pool #2
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Unpaid Principal Balance                     $27.0 million    $37.6 million
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Loan Count                                        113              183
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CLTV Range                                        All              All
----------------------------------------------------------------------------
BPO CLTV                                          100              98
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Average Months Delinquent                         57               51
----------------------------------------------------------------------------
Average Loan Balance ($000)                      239.0            205.5
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Geographical Distribution                      Miami, FL        Tampa, FL
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Winning Bidder                              Community Loan   Community Loan
                                              Fund of New      Fund of New
                                             Jersey, Inc.     Jersey, Inc.
----------------------------------------------------------------------------
Cover Bid Price                               Around $70       Around $70
(second-highest bid price)
----------------------------------------------------------------------------

Table 2: SPO Pool Offerings

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   Description     Pool #1     Pool #2     Pool #3     Pool #4      Pool #5
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Unpaid Principal    $132.8      $335.7      $354.1      $373.9      $165.0
Balance            million     million     million     million     million
----------------------------------------------------------------------------
Loan Count           689        1,720       1,537       1,745        829
----------------------------------------------------------------------------
CLTV Range        Less than   Less than    Greater     Greater       All
                      90          90       than or     than or
                                         equal to 90  equal  110
                                           and less
                                           than 110
----------------------------------------------------------------------------
BPO CLTV              73          73         100         138         130
----------------------------------------------------------------------------
Average Months        44          45          47          47          41
Delinquent
----------------------------------------------------------------------------
Average Loan        192.8       195.2       230.4       214.3       199.0
Balance ($000)
----------------------------------------------------------------------------
Geographical       National    National    National    National    National
Distribution
----------------------------------------------------------------------------
Winning Bidder       LSF9        LSF9        LSF9      Rushmore    Rushmore
                   Mortgage    Mortgage    Mortgage      Loan        Loan
                  Holdings,   Holdings,   Holdings,   Management  Management
                     LLC         LLC         LLC      Services,   Services,
                                                         LLC         LLC
----------------------------------------------------------------------------
Cover Bid Price    Mid $80s    Low $80s    Mid $60s   High $40s    Low $50s
(second-highest
bid price)
----------------------------------------------------------------------------

Last year, Freddie Mac's regulator, the Federal Housing Finance Agency, announced enhanced requirements for NPL sales. Additional loss mitigation standards that apply to all the winning bidders on this sale were included for loans with proprietary modifications resulting in a temporary reduction in borrower payments. Specifically, these additional standards include annual rate increases and a cap on the permanent rate after the initial payment reduction period. These changes encourage sustainable modifications that have the potential to give more borrowers the opportunity for home retention.

Advisors to Freddie Mac on the transaction were Wells Fargo Securities, Credit Suisse Securities and The Williams Capital Group, a minority-owned business.

Additional information about the company's NPL sales is at http://www.freddiemac.com/npl/.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four home borrowers and is the largest source of financing for multifamily housing. Additional information is available at FreddieMac.com, Twitter @FreddieMac and Freddie Mac's blog at FreddieMac.com/blog.

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