FHFA: Non-performing Loan Sales Report
December 4, 2018
Washington, D.C. – The Federal Housing Finance Agency (FHFA) today released its semiannual report providing information about the sale of non-performing loans (NPLs) by Fannie Mae and Freddie Mac (the Enterprises). The Enterprise Non-Performing Loan Sales Report includes information about NPLs sold from August 1, 2014 through June 30, 2018, and reflects borrower outcomes as of June 30. The sale of NPLs reduces the number of 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.
The new report shows that, through June 30, 2018, the Enterprises sold 98,061 NPLs with a total unpaid principal balance (UPB) of $18.7 billion.
- In the first half of 2018, 7,140 NPLs were sold, compared to 18,419 total NPLs sold in 2017.
- NPLs sold through the first half of 2018 had an average delinquency of 3.1 years and an average current loan-to-value ratio of 95 percent (not including capitalized arrearages).
- New Jersey, New York, and Florida accounted for 46 percent of NPLs sold. These three states also accounted for 47 percent of the Enterprises’ loans that were 1 year or more delinquent as of December 31, 2014, prior to the start of NPL programmatic sales in 2015.
- From December 31, 2015 to June 30, 2018 the number of loans one or more years delinquent held in the Enterprises’ portfolio decreased by 61 percent.
The borrower outcomes in this report are as of June 30, 2018 and are based on the 88,200 NPLs that were settled by December 31, 2017.
These outcomes reflect the following:
- As of June 30, 2018, 62 percent 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 percent foreclosure avoided versus 12.7 percent 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 percent foreclosure versus 28.6 percent 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.
- 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).
FHFA will continue to provide reporting on NPL sales borrower outcomes on an ongoing basis.
Media: Corinne Russell (202) 649-3032 / Stefanie Johnson (202) 649-3030
Consumers: Consumer Communications or (202) 649-3811