Freddie Mac sells almost $1bn in NPLs

The US government-backed mortgage provider has sold its largest single NPL disposal to a single bidder.

Freddie Mac has found a buyer for its largest ever sale of non-performing loans. GCAT Management Services won the bidding for all three portfolios which are made up of 5,398 individual loans, the government-controlled mortgage lender announced. 

The loans have an aggregate unpaid principal balance of $985 million and have been non-performing for an average of three years. Many of the borrowers have already been evaluated for or are in loss mitigation programmes with some in foreclosure. Previously modified mortgages that became delinquent account for 24.7 percent of the outstanding balance.

Freddie Mac split the facilities into three different portfolios before putting them up for sale, and invited interested buyers to bid for individual portfolios or for all three, as PDI reported earlier this month

Bids were invited from a list of pre-approved potential investors.

The first pool included 3,577 loans with an aggregate unpaid balance of $629.6 million and a loan-to-value ratio of 74 percent (based on broker price opinions BPO). The second highest bid for that pool was in the low 80s, said Freddie. The second pool comprised 1,331 loans with an aggregate unpaid balance of $235.9 million and a BPO loan-to-value of 84 percent. Runner-up bids were in the low 70s. The final portfolio was made up of 490 loans with an unpaid principal balance totalling $120 million and with an estimated loan-to-value of 74 percent. The second highest bid was in the mid-70s.

The first two loan pools were secured against properties across the United States while the third $120 million portfolio related to assets in New York, exclusively. The average loan size is just over $180,000 with an interest rate of 5.5 percent. 

Freddie Mac only recently began selling off its non-performing loan assets. The first sale was in summer last year with the most recent sale made up of three pools of loans with unpaid balances totalling $392 million. Those three pools attracted bids in the low 90s, the mid-70s and the mid-50s, according to a release from Freddie following the sale in February.

Freddie Mac was advised on the sale by Wells Fargo, Credit Suisse and The Williams Capital Group. The transaction is expected to settle in early May.