Wells Fargo & Co. recently sold $243 million of nonperforming residential mortgages and Citigroup unloaded $138 million of product, according to investors and brokers who play in that space.
One bidder who tracks deals told National Mortgage News that close to $1 billion of NPL-related loan packages traded hands shortly before the Thanksgiving holiday.
This bidder, requesting his name not be used, said the Wells portfolio sold for 49 cents on the dollar (of UPB), the Citi package, 52 cents. Both these banks had not returned telephone calls about the matter as this website went to press.
Wells and Citi have been active sellers of NPLs all year long. Companies that recently placed bids on NPLs include Selene Finance out of Texas, Kondaur Capital, and PennyMac Mortgage Investment Trust. Kondaur and PennyMac are based in Southern California.
Auctions of NPLs are heating up, in part, because some banks believe they have enough reserves set aside to take the hit on their problem loans. "Wells and Citi, in particular, want to get this stuff behind them," said a New York-based investor.
Also, more investors in NPLs are contemplating issuing securities backed by the loans they buy as a way to add liquidity to the market.
