Fannie Mae is contemplating selling nonperforming mortgages out of its portfolio, offering the notes to the highest bidder, according to vendors and investors who play in the NPL space.
The government-controlled secondary market giant declined to comment about the situation and officials who have talked to the GSE about the idea did not want to be identified for fear of losing a potential client.
Industry officials said if Fannie sells NPLs—instead of foreclosing on the mortgages and selling the resulting REO—it could save hundreds of millions of dollars, depending on the final sale price.
Over the past year the GSE, along with Freddie Mac, its sister company, have purchased nearly $267 billion of NPLs out of their MBS pools.
Now that the two have taken title to these assets, they must either work the loan out through a servicer, or foreclose. (Both have been in conservatorship since September 2008.)
Fannie at times has been impatient with the progress made by some of its servicers in handling "high touch" mortgages, yanking away servicing rights from such customers as Flagstar Bancorp and others. A little more than two years ago the GSE was contemplating buying subservicer Litton Loan Servicing of Houston to focus attention on delinquent loans but eventually the acquisition fell through and then Fannie went into conservatorship. (See related story on IBM in this issue.)
At the end of September, Fannie itself had $212 billion of nonperforming loans on its books. In the third quarter alone it took control of 85,349 housing units, according to a recent SEC filing.
The GSE has a policy of trying to sell its REO to owner occupants first, but has engaged in bulk sales on homes located in undesirable neighborhoods or units that are severely dilapidated.
About two weeks ago Fannie sent out for bid a $30 million pool of bulk real estate-owned properties, according to investors who have viewed the offering circular.
The sale has yet to close. Buyers can bid on the entire package or certain geographic segments.
At press time, a bid deadline could not be established. A spokeswoman for the GSE had no information on the package or any deadlines.
The properties are scattered across the U.S.
