On March 2, 2015, the Federal Housing Finance Agency (FHFA) announced enhanced non-performing loan (NPL) requirements for sales of NPLs by Freddie Mac and Fannie Mae (the Enterprises) that will reduce risk to taxpayers by transferring it to the private sector. FHFA believes that the sale of severely delinquent loans through NPL sales will reduce Enterprise losses and improve borrower and neighborhood outcomes.
The enhanced NPL sale requirements draw upon the experience of Freddie Mac’s two pilot sales of NPLs last year and this year. The loans in these two transactions have an aggregate value of approximately one billion dollars in unpaid principal balance.
The loans included in NPL sales will generally be severely delinquent – typically more than one year past due. FHFA’s goal is to achieve more favorable outcomes for the Enterprises and for borrowers by providing alternatives to foreclosure wherever possible. In addition, reporting by servicers on borrower outcomes will be required after the transactions close, which will allow the Enterprises to document whether the desired outcomes are being achieved.