Freddie Mac announced Thursday that it sold 157 deeply delinquent non-performing loans (NPLs) totaling about $31 million in aggregate unpaid principal balance (UPB) in its first-ever Extended Timeline Pool Offering (EXPO) sale on June 3.
EXPOs differ from Freddie Mac's Standard Pool Offerings in that the loans include smaller pool sizes and a longer marketing period. Freddie Mac is targeting smaller investors with its EXPO auctions, which are intended to give these investors extra time to secure funding to participate in the NPL sales.
Freddie Mac began marketing the pool of loans on April 21 and encouraged private investors, minority- and women-owned businesses, non-profits, and neighborhood advocacy funds to bid in the auction, subject to meeting bidder qualification requirements. Those requirements include: the bidding servicer must be approved by and in good standing with GSEs; the servicers must prioritize loan modifications over non-home retention solutions and encourage sales to owner occupants and non-profits; servicers must comply with the Treasury Department's Making Home Affordable Programs, including the Home Affordable Modification Program (HAMP), and must evaluate eligible borrowers for those programs; servicers must evaluate borrowers for proprietary modifications when they are deemed non-HAMP eligible; and servicers must honor all completed modifications.
The winning bidder for the single pool of loans was Corona Asset Management XII, LLC. The cover bid price, the second highest bid, was in the high 80s percent of UPB. The weighted average of broker price opinion, loan-to-value was 80 percent; the average loan size of the 157 loans was $199,079; and the note rate was 5.6 percent.
The loans in the pool were an average of four years delinquent, meaning the loans have either been previously evaluated or are in various stages of loss mitigation or are in foreclosure. Approximately 22 percent of the aggregate pool balance was made up of loans that were previously modified and later became delinquent, according to Freddie Mac.
Wells Fargo Securities and the Williams Capital Group acted as advisors to Freddie Mac for the transaction. The transaction is expected to settle in late July 2015.
Justin Lee Thayer is Lane counties expert in market analysis for real estate investors. Call Justin @ 541-543-7287
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