By Brian Honea

As they promised earlier this year, Fannie Mae andFreddie Mac have intensified their efforts in the last few months to rid their single-family residential mortgage portfolios of deeply delinquent, non-performing loans (NPLs).

On Thursday, Freddie Mac announced it ismarketing a bundle of NPLs with $1.2 billion in aggregate unpaid principal balance, the largest NPL sale to date. It is Freddie Mac’s sixth NPL sale of the year and the seventh overall; the first occurred last year in July. Including yesterday’s NPL transaction, Freddie Mac has offered nearly $4 billion worth of NPL sales over the last 13 months.

Freddie Mac reported on its blog on Friday that the mission of its NPL sales program is four-fold. According to Freddie Mac, the purposes of the program are to:

Help reduce less liquid assets via economically sensible transactions;
Encourage broad investor participation;
Consider borrower outcomes, neighborhood stability, and the market; and
Provide a well-controlled and transparent process.

“We continue to work to broaden participation in our auctions by marketing our transactions to a extensive investor group–including community-based organizations, nonprofits and women- and minority-owned businesses,” Freddie Mac said on the blog.

Meanwhile, Fannie Mae closed its first-ever bulk NPL sale in May. That transaction included approximately 3,000 deeply delinquent residential single-family mortgage loans totaling about $762 million in UPB. In mid-July, Fannie Mae began marketing another bulk NPL sale with nearly 4,000 loans and $788 million in UPB.

Private investors as well as non-profits and minority- and women-owned businesses are encouraged to bid in each auction. Bidders must be pre-approved to participate in the NPL auctions; they must meet theguidelines set by FHFA in March. Among other requirements, bidders must identify servicing partners at the time of qualification and complete a questionnaire to demonstrate a record of successful loan resolution through foreclosure alternatives. Also, servicers who purchase non-performing Agency loans must apply a “waterfall of resolution tactics” before resorting to foreclosure.

“The goal of our non-performing loan sales is to be able to offer borrowers additional options to avoid foreclosure, while also reducing the number of seriously delinquent loans in Fannie Mae’s portfolio,” said Joy Cianci, Fannie Mae’s SVP for Credit Portfolio Management. “We hope to inspire opportunities for non-profit organizations, smaller investors, minority- and women-owned businesses and community groups to work together to help more borrowers avoid foreclosure and collaborate on neighborhood stabilization efforts.

With the conservatorship approaching seven years old in September, the ultimate goal is to lighten the burden for taxpayers.

“FHFA‘s expectation is that the sale of seriously delinquent loans through non-performing loan sales will result in more favorable outcomes for borrowers, while also reducing losses to the Enterprises, and, therefore, to taxpayers,” the GSEs’ conservator, FHFA, wrote in its 2014 Report to Congress released in June.

By Brian Honea

Freddie Mac announced on Wednesday its largest sale ever of deeply delinquent, non-performing loans from its mortgage investment portfolio, consisting of 5,208 loans serviced by Ocwen Financial with an unpaid principal balance (UPB) of approximately $1.1 billion.

The sale was completed five days before the announcement (on September 11) and the transaction is expected to settle in October 2015. The sale is part of Freddie Mac’s Standard Pool Offerings (SPOs).

The loans offered were delinquent by an average of three and a half years, meaning that the borrowers were likely previously evaluated for loss mitigation options or in some stage of loss mitigation or foreclosure, according to Freddie Mac. Approximately 33 percent of the aggregate pool balance consisted of loans that were modified and later became delinquent. The aggregate pool has a loan-to-value ratio of approximately 91.1 based on broker price opinion and is geographically diverse, according to Freddie Mac.

The loans in this sale were offered in five different pools. The winners were as follows:

9-16 Freddie Mac Graph

Freddie Mac began marketing the transaction through its advisors on August 13 to potential bidders. As always, Freddie Mac encouraged participation from minority- and women-owned businesses (MWOBs), non-profits, neighborhood advocacy funds, and private investors in the bidding for this NPL sale. Advisors for the transaction were Credit Suisse, Wells Fargo Securities and First Financial Network, a woman-owned business.

The FHFA, Freddie Mac’s conservator, requires all bidders to comply with the Agency’s enhanced requirements for NPL sales announced on March 2, which include approval by and good standing with government housing agencies (Freddie Mac, Fannie Mae, Ginnie Mae, and the Federal Housing Administration); evaluating borrowers for eligibility in the government’s Home Affordable Modification Program (HAMP); and applying a “waterfall” of resolution tactics before resorting to foreclosure.

Freddie Mac’s last SPO sale of non-performing loans, which was completed on July 28, was comprised of 3,577 deeply delinquent loans with $591 million in UPB.

By Brian Honea Urban Institute reported earlier this month that the mortgage-related investment portfolios for bothFannie Mae and Freddie Mac continue to contract and were both well below their 2015 portfolio cap as of the end of November. Whereas Freddie Mac’s mortgage-related investment portfolio took an upward turn in December, however, Fannie Mae’s mortgage portfolio continued contracting at a substantial rate, according to Fannie Mae’s December 2015 Monthly Volume Summary. Fannie Mae’s gross mortgage portfolio contracted at

By Brian Honea Urban Institute reported earlier this month that the mortgage-related investment portfolios for bothFannie Mae and Freddie Mac continue to contract and were both well below their 2015 portfolio cap as of the end of November. Whereas Freddie Mac’s mortgage-related investment portfolio took an upward turn in December, however, Fannie Mae’s mortgage portfolio continued contracting at a substantial rate, according to Fannie Mae’s December 2015 Monthly Volume Summary. Fannie Mae’s gross mortgage portfolio contracted at

PHH’s subservicing portfolio will be cut by nearly 30% By Ben Lane It appears that PHH Corp. has a subservicing problem on its hands, as for the second time in four months, the company is about to lose a large portion of its mortgage subservicing portfolio. PHH disclosed Thursday that it recently received notice from HSBC Bank that it plans to sell the mortgage servicing rights on approximately 139,000 mortgage loans currently subserviced by PHH Mortgage Corporation, a wholly-owned subsidiary of PHH, on behalf of HSBC. In an 8-K fili

By Ben Lane

Now that the dust is starting to settle from the election, a clearer picture is beginning to emerge of what types of actions President-elect Donald Trump will pursue once the “-elect” is removed from his title.

Chief among those planned actions appears to a plan to “dismantle” the Dodd-Frank Wall Street Reform Act.

Trump’s plans for the first days of his term as president are being revealed on a website launched by his transition team.

Under a section titled “Make America Great Again,” the website lists the three main tenets of Trump’s plan: Making America Secure Again; Getting America Back To Work Again; and Government for the People Again.

Each of those main sections has several subsections, and those in the financial services industry should pay close attention to the “Getting America Back To Work Again,” as it contains much of Trump’s plan for the economy.

“Financial markets are vital to the American economy. Capital markets bring investors together with creators to fund new ideas and fuel economic growth,” the website reads under a subsection entitled “Financial Services.”

“Banks and other lenders provide funding to small businesses and mortgage borrowers to help fund the American Dream,” the website continues. “Federal policy should focus on free enterprise, while protecting consumers by policing markets for force and fraud. Both Wall Street and Washington should be held accountable.”

The Trump website then goes on to discuss the impact of the Dodd-Frank Act, and how the Trump administration will work to replace it.

The website calls Dodd-Frank a “sprawling and complex piece of legislation that has unleashed hundreds of new rules and several new bureaucratic agencies,” including the Consumer Financial Protection Bureau.

“The proponents of Dodd-Frank promised that it would lift our economy. Yet now, six years later, the American people remain stuck in the slowest, weakest, most tepid recovery since the Great Depression,” the website states.

“Paychecks have been stagnant. Savings are being depleted, millions are unemployed or underemployed, and millions more have dropped out of the workforce altogether,” the website continues. “Economic growth remains below 2%, about half the historic average. The big banks got bigger while community financial institutions have disappeared at a rate of one per day, and taxpayers remain on the hook for bailing out financial firms deemed ‘too big to fail.’”

In the words of the Trump transition team, Dodd-Frank and the economy it fostered “does not work” for America.

“Bureaucratic red tape and Washington mandates are not the answer,” the website states. “The Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation.”

One of the main issues that many have with Dodd-Frank is the amount of regulations that the law place on the financial services industry.

Trump’s website doesn’t provide any additional details on how President Trump will go about dismantling Dodd-Frank, but the website does also contain a separate section entitled “Regulatory Reform,” which is called a “cornerstone” of the Trump Administration.

According to the website, Trump’s regulatory reform effort, which he spoke about often on the campaign trail, includes: “a temporary moratorium on all new regulation, canceling overarching executive orders and a thorough review to identify and eliminate unnecessary regulations that kill jobs and bloat government.”

The Trump Administration is “committed to regulatory reform that will produce sensible regulations that allow America to be great,” the website states.

As HousingWire previously reported, there’s already a Republican-led effort underway in Congress to repeal and replace Dodd-Frank and many of its regulations.

Earlier this year, House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, introduced a bill in the House that would replace Dodd-Frank with a “pro-growth, pro-consumer” alternative that would bring significant reforms to the CFPB, and much more.

The bill, called the Financial CHOICE act, passed out of the House Financial Services Committee in September.

The bill would “end taxpayer-funded bailouts of large financial institutions; relieve banks that elect to be strongly capitalized from ‘growth-strangling regulation’ that slows the economy and harms consumers; and impose tougher penalties on those who commit fraud as well as greater accountability on Washington regulators.”

Again, it’s unknown how Trump will accomplish the dismantling of Dodd-Frank, but Christopher Whalen, the senior managing director of Kroll Bond Rating Agency, is already predicting that pursuing the Financial CHOICE Act, or some version of it could be one of Trump’s first moves as president.

“Changing the narrative regarding Dodd-Frank and related regulations is not a simple task,” Whalen wrote in a post-election note. “That said, addressing Dodd-Frank and related issues is a lot simpler than either tax reform or fixing the (Affordable Care Act.)”

Whalen says that KBRA’s “decidedly speculative bet” is that Trump will back a modified version of the Financial CHOICE Act that would be altered to make it more “palatable” to the Senate.

Despite Democratic opposition to any proposed changes to Dodd-Frank, Whalen writes that changes to Dodd-Frank could be much more easily accomplished that changes to the tax code, or repealing Obamacare.

“We note that Rep. Hensarling is very close to Vice President-elect and Indiana Governor Mike Pence from the latter’s days in Congress, and that Hensarling even travelled with the campaign,” Whalen writes. “KBRA notes that there are a number of other issues that may catch the attention of the new President next year, but for our money passage of an amended version of the CHOICE Act has the highest probability of success in 2017. Needless to say, the financial services industry would be very supportive.”