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Fannie & Freddie Selling Non-performing Loans at Record Pace

Fannie Mae and Freddie Mac reduced their combined inventories of severely aged loans by 45.2% in 2016, with a total decline of 51,663 such loans from 114,185 to 62,522. The report added that while NPL sales mainly drove these reductions, reductions are also attributable to the utilization of special servicers; streamlined modifications; FHFA’s one-time principal reduction modification program provided in 2016; and targeted modification strategies. Under the 2016 Scorecard, the enterprises had to provide plans for continuing NPL sales. In their plans, the GSEs addressed:

• Broad NPL sales strategy.

• Potential expansion to multi-servicer pools.

• Efforts to continue offering small pools and strengthening nonprofit access and purchase opportunities.

• Consideration for improving borrower outcomes and, where appropriate, impacts on neighborhood stabilization.

• Public reporting of loan performance post-sale.

Furthermore, the enterprises continued to reduce their inventory of REO properties by focusing their efforts on supporting owner-occupants and nonprofit purchasers. In 2016, Fannie Mae and Freddie Mae reduced their REO property inventories by 33%, with a total decline of 24,746 properties to 49,511 properties.

The chart breaks down the non-performing loan sales by the enterprises since 2014.

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