As of June 30, 54,311 non-performing mortgages sat in the portfolios of Fannie Mae and Freddie Mac, decreasing by more than 25% from the end-of-2022 total of 72,516, the Federal Housing Finance Agency said in a report issued this week.  

The last time the delinquent total came in lower was at the end of 2019 when it dropped to 51,512, a few months before Covid altered the secondary market landscape. With pandemic loss mitigation programs in place, the number grew over four times to 208,147 at the end of 2021.  

But the GSEs conducted no private-market sales of the available non-performing portfolio between January and June last year, as both paused to reconfigure their programs with new foreclosure prevention measures and additional reporting requirements. At the end of 2022, the share of delinquent mortgages sold by Fannie Mae and Freddie Mac had fallen to 8,325, the third lowest number on record, representing just 4% of the total available at that time.  

Several senators in 2023 had raised concerns to the FHFA that sales of non-performing loans to investors would harm struggling homeowners, leaving them unprotected from property loss in a market quickly becoming unaffordable. 

Since program inception in 2014, the GSEs combined have sold 163,297 NPLs to private buyers, with requirements applied on the sales intended to help delinquent borrowers stay in their homes. Loans had an average delinquency period of 2.8 years, with total unpaid principal balance at time of settlement of $30 billion.

The average unpaid balance of NPLs sold was $184,231 at settlement.

Of the 160,576 NPLs sold with reportable outcomes at the end of last June, 39% managed to avoid foreclosure, improving from 38% in the late 2022 report. Of that total, 11.5% ended up receiving a permanent modification. Another 10.6% were defined as self cured and 10.2% were paid in full. Strong equity positions have helped homeowners stay out of foreclosure, according to late 2023 data from Intercontinental Exchange.