Bidding open for private investors and small businesses
Freddie Mac has announced plans to auction approximately $233 million worth of deeply delinquent residential loans as part of its ongoing efforts to reduce less-liquid assets in its mortgage-related investments portfolio.
The non-performing loans (NPLs) being sold are first-lien loans that have been seriously delinquent for an extended period, according to the company’s statement.
The loans, which are serviced by Select Portfolio Servicing, Newrez (doing business as Shellpoint Mortgage Servicing), and Nationstar Mortgage (dba Rushmore Servicing), will be offered in three distinct pools.
These include a Standard Pool Offering (SPO) and two Extended Timeline Pool Offerings (EXPO), the latter specifically designed to encourage participation from smaller investors, including non-profits and Minority, Women, Disabled, LGBTQ+, Veteran, or Service-Disabled Veteran-Owned Businesses (MWDOBs).
Freddie Mac has set bid deadlines of September 26 for the SPO pool and October 10 for the EXPO pools. Qualified bidders, including private investors, non-profits, neighborhood advocacy organizations, and MWDOBs, must complete a qualification process to gain access to the data room containing loan details and submit their bids.
All bids must be made on an all-or-none basis for each pool. The winning bidder will be selected based on the economic value of the bids, provided they meet Freddie Mac’s internal reserve requirements.
“Freddie Mac’s seasoned loan offerings focus on reducing less-liquid assets in the company’s mortgage-related investments portfolio in an economically sensible way,” Freddie Mac said in its media release. “This includes sales of NPLs, securitizations of re-performing loans (RPLs) and structured RPL transactions.”
Freddie Mac has been actively managing its portfolio of non-performing loans since 2011. Over that period, the company has sold a total of $10.3 billion in NPLs. In addition, Freddie Mac has securitized approximately $78.6 billion in re-performing loans (RPLs) through a variety of programs, including fully guaranteed mortgage-backed securities, the Seasoned Credit Risk Transfer (SCRT) program, and the Seasoned Loans Structured Transaction (SLST) program.
Advisors for this transaction include Citigroup Global Markets Inc. and First Financial Network.
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