In September, HUD plans to auction off 5,000 defaulted mortgages that are in the process of foreclosure. Investors, presumably, will line up to bid and the government will have disposed of a headache. But the HUD auction raises an interesting question: if HUD can unload nonperforming loans (NPLs) why can’t Fannie Mae and Freddie Mac? As reported by National Mortgage News a few months back at least one of the GSE sent out a ‘request for proposal’ seeking advisors for some type of NPL auction. To date, we’ve heard nothing more on the idea and as one NPL investors told us the other day: “I just think they’re jerking everyone around.”
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