The GSE regulator is looking at selling off modified loans that Fannie Mae and Freddie Mac are holding in their giant mortgage portfolios.
Federal Housing Finance Agency acting director Edward DeMarco told a congressional panel that his agency is considering selling "blocks" of mortgages, including nonperforming and modified loans.
"How we would execute those sales is under review and discussion," DeMarco said Wednesday afternoon at a House GSE subcommittee hearing.
FHFA is charged with shrinking Fannie and Freddie's portfolios at a rate of 10% a year. "We are looking to liquidate at a faster rate," DeMarco testified.
He noted that the GSEs have been taking non-performing loans out of guaranteed securitized pools and modifying those loans to keep the borrowers in their homes. The modified loans have become an increasing share of the portfolios over the past few years.
Fannie has reported that its servicers modified over 400,000 loans in 2010 and another 51,000 in the first quarter.
Freddie modified 170,000 loans in 2010 and another 35,000 in the first quarter of this year.
The FHFA director said the performance of the modified loans "continues to improve and continues to exceed expectations in terms of low re-default rates."
