Better Outcomes for Nonperforming GSE Loans Sold

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A new report indicates that non-performing loans being sold by the government-sponosred enterprises are experiencing better outcomes than before they are sold.

Through the end of last year, Fannie Mae and  Freddie Mac have sold 90,291 non-performing mortgages with an aggregate unpaid principal balance of $17.4 billion.

The life-to-date total includes 18,419 non-performing residential loans that were sold just in 2017, down from 44,169 during 2016.

The details were reported Wednesday by the two companies’ regulator and conservator, the Federal Housing Finance Agency.

The report noted that the sale of non-performing loans reduces the number of delinquent GSE loans while transferring credit risk.

Also, as a result of requirements imposed by the GSEs and FHFA on buyers of non-performing loans, the loans are seeing better borrower outcomes than loans that were not sold.

For instance, foreclosures avoided on non-performing loans that were sold outnumbered foreclosures on non-performing loans that remained in the GSEs’ portfolios.

In addition, FHFA reported that foreclosure avoidance was much greater when the homes are still occupied by the borrowers.


Mortgage Daily Staff


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