WASHINGTON (3/4/15)--Enhanced requirements for Fannie Mae and Freddie Mac to sell non-performing loans (NPLs) were announced by the Federal Housing Finance Agency (FHFA) Tuesday.
According to the FHFA, it approved NPL sales by Fannie and Freddie to reduce the number of severely delinquent loans held in their inventories and to transfer risk to the private sector.
"FHFA expects that with these enhanced requirements, NPL sales by Freddie Mac and Fannie Mae will result in more favorable outcomes for borrowers and local communities, while also reducing losses to the Enterprises and, therefore, to taxpayers," said FHFA Director Mel Watt. "Under the requirements announced today, servicers must consider borrowers for a range of alternatives to foreclosure."
According to the FHFA, the requirements are expected to encourage broad participation by potential investors and provide for future publication of aggregate data about borrower outcomes.
The enhanced requirements include:
Fannie and Freddie NPL sales are generally expected to include loans that are severely delinquent, such as loans that are more than a year past due.