Deeply delinquent loans sold amid tightening lending standards
Fannie Mae has sold 51 deeply delinquent loans totaling $14.3 million in unpaid principal balance (UPB) through its latest Community Impact Pool transaction.
The 24th installment of these non-performing loan sales by the government-sponsored enterprise focused on mortgages concentrated in the New York metropolitan area.
GITSIT Solutions (Tourmalet) was the winning bidder for the pool, which carried an average loan size of $279,812 and a weighted average note rate of 4.35%. The second highest bid for the pool was 86.20% of the UPB, which translates to 30.69% of the Broker Price Opinion (BPO).
The transaction is expected to close on July 24, with BofA Securities and First Financial Network serving as advisors on marketing the pool.
As mandated, the purchaser must comply with several requirements aimed at preventing foreclosures and supporting homeownership retention. These include honoring any approved or in-process loss mitigation efforts like forbearance arrangements and loan modifications.
Additionally, the buyer must offer delinquent borrowers loss mitigation options, including potential principal forgiveness loan modifications, prior to pursuing foreclosure actions.
The sale continues Fannie Mae’s strategy of auctioning off non-performing loans through Community Impact Pools while ensuring foreclosures remain a last resort through oversight and assistance obligations.
While Fannie Mae has conducted these delinquent loan sales for over five years now, the latest deal comes amid rising interest rates and tightening lending standards reported across the mortgage industry in early 2024.
The Federal Reserve’s senior loan officer opinion survey pointed to broad trends of stricter residential underwriting criteria and weakening home loan demand across most mortgage categories during the year’s first quarter.
Though underwriting for GSE and agency-eligible mortgages was largely unchanged, a significant share of banks reported tightening standards for riskier products like non-qualified mortgages, subprime loans, and home equity lines of credit.
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