By Jim Perskie
Nearly half of the non-performing loans sold by Fannie Mae and Freddie Mac to the private sector last year were located in New York, New Jersey or Florida, according to a report released Monday by the Federal Housing Finance Agency.
The report found that 44 percent of the loans – known as NPLs – transferred last year were in those three states.
A loan is deemed non-performing when the borrower is in default and does not pay the monthly principal and interest repayments for a specified period – often 90 days or depending on the terms of the mortgage agreement.
Freddie and Fannie sell non-performing loans to reduce the number of delinquent loans in the their portfolios and to transfer credit risk to the private sector. As part of the sale, FHFA, Fannie and Freddie impose requirements on buyers designed to achieve more favorable outcomes for borrowers than foreclosure.
The FHFA report also found:
- In 2019, Fannie and Freddie sold 126,757 NPLs with a total unpaid principal balance of $23.8 billion.
- NPLs sold had an average delinquency of 2.9 years and an average loan-to-value ratio of 91 percent.
- The average delinquency for pools sold ranged from 1.4 years to 6.2 years.
- Fannie Mae sold 86,216 loans with an aggregate unpaid balance of $15.8 billion, an average delinquency of three years, and an average loan-to-value ratio of 89 percent.
- Freddie Mac sold 40,541 loans with an aggregate unpaid balance of $8.1 billion, an average delinquency of 2.9 years, and an average loan-to-value ratio of 98 percent.
See the full report here.