Fannie markets more than $3 billion in distressed loans

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Fannie Mae put more than $3 billion in distressed loans up for bid Wednesday.

The government-sponsored enterprise is marketing in collaboration with Citigroup Global Markets Inc. a $2.2 billion package of reperforming loans that marks its fifth transaction of this type. Buyers must agree to offer sustainable loss mitigation to any borrower who redefaults within five years following the sale.

Bids are due on Nov. 6. Goldman Sachs affiliate MTGLQ last month purchased Fannie's last reperforming loan sale and also has purchased multiple nonperforming loan packages Fannie has sold.

Fannie on Wednesday also began marketing in conjunction with Bank of America Merrill Lynch and First Financial Network Inc. more than $1.4 billion of nonperforming loans.

The nonperforming loans going up for bid are divided into four larger pools that total $1.29 billion and two smaller pools of loans totaling $129.6 million.

The two smaller nonperforming loan pools are Fannie's ninth and 10th community impact pools, which are typically smaller, geographically focused pools designed to appeal to smaller investors such as nonprofits and minority- and women-owned businesses.

One community impact pool is larger and geographically diverse, but the other is small and focused on the New York area. Bids on the four larger pools are due Nov. 2 and bids on the two community impact pools are due Nov. 15.

Fannie began selling nonperforming loan pools at the direction of its regulator and conservator, the Federal Housing Finance Agency, in 2015; and the agency started marketing reperforming loan pools last year.

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Distressed GSEs Loss mitigation Fannie Mae FHFA Bank of America Merrill Lynch