DS News - Kendall Baer - 08 November 2016
Fannie Mae has announced the winning bidder for its pilot reperforming loan sale. The sale included approximately 3,500 loans totaling $789.2 million in unpaid principal balance, divided into two pools. The winning bidder of both pools for the transaction, expected to close on December 15, 2016, is Towd Point Master Funding, LLC (Cerberus).
“We are pleased to see a high level of investor interest in our reperforming loans,” said Bob Ives, VP of Retained Portfolio Asset Management, Fannie Mae. “This sale supports our efforts to reduce the size of the company’s balance sheet.”
In collaboration with Citigroup Global Markets Inc., Fannie Mae began marketing these loans to potential bidders on October 11, 2016.
When the GSE first announced the sale, DS News sat down with Ives to discuss Fannie Mae’s motives behind this offering that is the first of its kind. Ives shared that today, the single biggest asset on Fannie Mae’s balance sheet is reperforming loans.
“These reperforming loans generally came from the modification of non-performing loans which were purchased first out of MBS, said Ives. “Successful modifications led to loans that are now performing. As we aim to reduce the balance of our retained portfolio, we turned to another important effort that allows us to securitize many of these reperforming loans in to Fannie Mae Agency MBS.”
"As we aim to reduce the balance of our retained portfolio, we turned to another important effort that allows us to securitize many of these reperforming loans in to Fannie Mae Agency MBS."
Bob Ives, VP of Retained Portfolio Asset Management, Fannie Mae
In this transaction, the loan pools awarded include 3,508 loans with an aggregate unpaid principal balance of $789,212,882; an average loan size $224,975; a weighted average note rate 4.07 percent; and a weighted average broker's price opinion (BPO) loan-to-value ratio of 104 percent for both Pool 1 and 2. Additionally, the cover bid price for the two pools is 88.15 percent of UPB (84.92 percent BPO).
“I think it is likely that we will continue to sell reperforming loans in the future but I am hesitant to describe it as programmatic selling,” said Ives. “I expect that we will have a few sales of reperforming loans next year so this could be stated as the first of more sales to come, but they will not necessarily be as large as this sale.”