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Freddie Mac completes massive sale of delinquent loans

Freddie Mac on Friday completed its largest ever sale of seriously delinquent loans.

The government sponsored enterprise (GSE) auctioned off 5,398 deeply delinquent loans with an unpaid principal balance of $985 million. One bidder, GCAT Management Services, won the bid for all the loans, which were sold in three pools. These loans were delinquent for roughly three years on average, Freddie reported in a news release. The owners have either attempted to modify these loans, or they are in some stage of foreclosure.

Freddie said the average loan size was $182,562, and had an average loan-to-value of 76 percent the property value. The average mortgage rate was 5.5 percent. Freddie earlier auctioned off loans with unpaid balances of $596 million and $392 million, at auctions in August and February.

The latest transaction is scheduled to close in early May, Freddie reported.

Earlier this month, the Federal Housing Finance Agency (FHFA) announced new standards for investors purchasing delinquent loans from the GSEs. FHFA is trying to ensure that servicers of the purchased loans try several options before foreclosing on them.

The agency also wants properties that are sold in foreclosure through a real-estate owned (REO) transaction to wind up in the hands of non-profits or owners who plan to occupy the homes. For the first 20 days that the property enters REO status, for example, the new rules say the property must be sold to a non-profit or owner occupier.


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