Fannie Mae and Freddie Mac have put billions of dollars' worth of distressed mortgage assets up for sale this year, but small buyers acquiring carve-outs of these offerings are driving activity in this niche market.

Since the government-sponsored enterprises stepped up sales of nonperforming loans, Fannie and Freddie's share of distressed market trading has grown to nearly 50%, from less than 10%, said Peter Andrews, CEO of Dreambuilder Investments, which invests in and manages distressed mortgages.

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