WASHINGTON – The Federal Housing Finance Agency (FHFA) shed almost 131,000 delinquent loans during the first half of this year, the agency reported this month.
The FHFA issued its latest report on the sale of non-performing loans (NPLs) by Fannie Mae and Freddie Mac (“the Enterprises”). The report includes sales information about NPLs sold through June 30, 2021.
The sale of NPLs reduced the number of delinquent loans in the Enterprises’ portfolios and transferred 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 showed that the Enterprises sold 130,808 NPLs with a total unpaid principal balance of $24.5 billion from program inception in 2014 through June 30, 2021. Loans included in the sales had an average delinquency of 2.9 years and an average current loan-to-value ratio of 91% (not including capitalized arrearages).
According to the FHFA, the average delinquency for pools sold ranged from 1.4 years to 6.2 years, and NPLs in New Jersey, New York and Florida represented 43% of the NPLs sold. The average unpaid principal balance of the delinquent loans sold was $187,588.
Borrower outcomes in the report were based on 128,087 NPLs that were settled by Dec. 31, 2020, and reported as of June 30, 2021.
NPLs on vacant homes had a much higher rate of foreclosure, FHFA reported: more than double the foreclosure rate of borrower-occupied properties (77.4% foreclosure versus 33% 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, the agency noted.