Freddie Mac Sells Off $706M in Delinquent Loans

Four of the five pools were purchased by an affiliate of Lone Star Funds.
Don Layton, CEO, Freddie Mac

Don Layton, CEO, Freddie Mac

McLean, Va.—By auction, Freddie Mac has sold from its mortgage-related investments portfolio 2,879 “deeply delinquent” non-performing loans serviced by Bayview Loan Servicing LLC. The sale is expected to settle in August, after which servicing will be transferred.

The loans, which totaled $706 million in unpaid principal balance, were offered as five separate pools, three of them geographically diverse Standard Pool Offerings. The other two packages were New York- and New Jersey-only pools.

The aggregate portfolio has a loan-to-value ratio of about 92 percent, and all five pools were sold at a weighted average price in the mid-60s as a percentage of the total UPB. Average loan balances ranged from $207,300 to $301,600 (in New York).

The loans have been delinquent for almost five years, on average. Given the loans’ serious delinquencies, according to Freddie Mac, “the borrowers have likely been evaluated previously for or are already in various stages of loss mitigation, including modification or other alternatives to foreclosure, or are in foreclosure. Mortgages that were previously modified and subsequently became delinquent comprise approximately 29 percent of the aggregate pool balance.”

The New Jersey portfolio and all three national pools were purchased by LSF9 Mortgage Holdings LLC, an affiliate of Lone Star Funds, Dallas. The New York portfolio was acquired by Upland Mortgage Acquisition Company II LLC. Lone Star Funds declined to comment on the transaction.

Advisors to Freddie Mac on the transaction were Bank of America Merrill Lynch and The Williams Capital Group LP, a minority-owned business.

In May, LSF9 was the successful bidder on three of five Freddie Mac SPO offerings, all geographically diverse, with cover bid prices from the mid-$60s to the mid-$80s.

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