Freddie Mac Offloads Nearly Half a Billion in Non-Performing Loans to Boost Stability

Freddie Mac, a pivotal player in the U.S. housing finance system, has made a significant stride in its ongoing efforts to fortify communities and provide relief to homeowners by announcing the sale of approximately $487 million in non-performing loans (NPLs). This substantial transaction is part of the enterprise's broader NPL and Reperforming Loan (RPL) sale program, meticulously designed to shrink its NPL portfolio and inject stability into neighborhoods across the nation.

The latest offering encompasses a portfolio of 2,752 non-performing loans, all secured by single-family properties.

These loans, which have fallen into arrears, boast an average unpaid principal balance of around $177,000. The geographical distribution of these properties is notable, with significant concentrations observed in key states such as New York, Florida, New Jersey, Illinois, and California – regions that have historically faced unique housing market challenges.

More than just a financial transaction, these NPL sales are strategically oriented toward specific, impactful objectives.

They aim to support neighborhood stabilization efforts, providing a lifeline to borrowers who are on the brink of foreclosure. By transferring these loans, Freddie Mac seeks to foster opportunities for alternative solutions that can keep families in their homes and prevent the widespread adverse effects of foreclosures on local economies.

The successful bidder for this considerable portfolio was U.S.

Bank, acting as trustee for a private securitization. A critical aspect of these sales involves a comprehensive due diligence process, where investors meticulously evaluate the loans prior to purchase. Following the acquisition, the servicing of these loans will be managed by Specialized Loan Servicing LLC (SLS) and Select Portfolio Servicing, Inc.

(SPS), two entities known for their expertise in handling distressed mortgages.

Crucially, Freddie Mac's commitment to homeowners does not end with the sale. The enterprise ensures that for a specified period post-sale, it will continue to offer loss mitigation options, mirroring the support provided to borrowers whose mortgages it retains.

This ongoing commitment is a cornerstone of Freddie Mac’s mission: to help struggling homeowners avoid foreclosure and actively contribute to the stability and revitalization of communities, paving the way for a more resilient housing market.