Fannie announces $2.78B re-performing loan sale

Fannie Mae reported its seventeenth re-performing loan sale transaction, a deal initially announced on September 10, 2020, which included the sale of approximately 19,670 loans totaling $2.78 billion in unpaid principal balance (UPB). Divided into five pools, the transaction expects to close on November 20, 2020.

Fannie began marketing its first sale of re-performing loans (previously delinquent, now current with or without a loan modification plan), in October 2016, as part of the company’s ongoing effort to reduce the size of its retained mortgage portfolio. 

Athene Annuity & Life Company and Athene Annuity & Life Assurance Company (Athene) were the winning bidders for Pool 1;  Pacific Investment Management Company LLC (PIMCO) for Pools 2 & 3; and Goldman Sachs Mortgage Company (Goldman Sachs) for Pools 4 & 5. Citigroup Global Markets Inc. served as advisor.

The loan pools awarded in this recent transaction include:

  • Pool 1: 3,690 loans with an aggregate UPB of $596,327,102, average loan size of $161,606, weighted average note rate 3.992% and average broker’s price opinion (BPO) loan-to-value (LTV) ratio of 64%.
  • Pool 2: 4,171 loans with an aggregate UPB of $598,101,909, average loan size $143,395, average note rate 4.477%; weighted BPO, LTV ratio of 67%.
  • Pool 3: 2,953 loans with an aggregate UPB of $529,598,000, average loan size $179,342, average note rate 4.185%, weighted BPO, LTV ratio of 72%.
  • Pool 4: 4,674 loans with an aggregate UPB of $530,138,276, average loan size $113,423, average note rate 4.659%, weighted BPO, LTV ratio of 65%.
  • Pool 5: 4,178 loans with an aggregate UPB of $527,104,220, average loan size $126,162, average note rate 4.557%, weighted BPO, LTV ratio of 65%.

The cover, second highest bids per pool, were 103.75% of UPB (52.88% of BPO) for Pool 1, 102.25% of UPB (54.27% of BPO) for Pool 2, 100% of UPB (60.39% of BPO) for Pool 3, 96.50% of UPB (47.39% of BPO) for Pool 4, and 93.55% of UPB (46.86% of BPO) for Pool 5.

Fannie offers interested bidders the option to register for ongoing announcements, training, and other information online. Pool specific information also will be available. 

Fannie is selling non-performing loans, which “are part of the Federal Housing Finance Agency’s 2015 Conservatorship Scorecard,” intended to reduce the number of seriously delinquent loans owned by Fannie, according to the company website.

New economic indicator challenges BLS reports, focuses on “functionally unemployed”

The Ludwig Institute for Shared Economic Prosperity (LISEP), established in 2019 by Gene Ludwig and his wife, Dr. Carol Ludwig,has developed a new economic indicator that challenges the traditional way of measuring and reporting employment data.

LISEP announced its inaugural monthly economic indicator, True Rate of Unemployment (TRU) was 26.1% for September, “compared to the accurate but misleading” 7.9% reported by the U.S Bureau of Labor Statistics (BLS). 

LISEP will issue the TRU one-to-two weeks following the release of the BLS unemployment report, on the first Friday of each month. 

TRU focuses on “the functionally unemployed.” It tracks the percentage of the U.S. labor force that does not have a full-time job, does not work 35 or more working hours a week but wants to, has no job, or does not earn a living wage, conservatively pegged at $20,000 annually before taxes, according to the LISEP website. An income of $20,000 or less per year is below the poverty level set by the U.S. Department of Health and Human Services (HHS).

“The True Rate of Unemployment sets out to put an end to misleading Americans, including policymakers, into thinking that the functionally unemployed are somehow employed,” said LISEP Chairman Gene Ludwig. “For example, the BLS unemployment rate characterizes someone as employed even if he or she can only find work for an hour in a two-week period, even if that person is only earning a few hundred dollars a year.

“Policymakers and political leaders make crucial decisions using this information, so continuing to use misleading data leads them in directions that can cause bad or weak decision-making, when in fact we have an employment crisis on our hands,” he said.

Ludwig created LISEP to improve the economic well-being of middle- and lower-income Americans through research and education, and seeks to advance the dialogue around policy solutions to improve the well-being of all Americans.”

In addition to TRU, LISEP released a new wealth analysis white paper, “Measuring Better: Development of ‘True Rate of Unemployment’ Data as the Basis for Social and Economic Policy,” which, according to Ludwig, show recent historic gains by the wealthiest Americans offset and obscure the plight of those at the lower end of the economic spectrum. 

“Even in the best of economic times – as measured by government economic indicators – it was obvious that too few policymakers were taking heed of the fact that many communities, and many low- and middle-income families, were being left behind,” Ludwig explained. “One logical explanation is that policy is being made using misleading aggregate data. A robust Wall Street does not always translate to a vibrant Main Street.”

As an example, Ludwig cited in a statement, January’s pre-pandemic BLS unemployment rate of 3.6% a level many economists would consider “full employment” but January TRU revealed 23.5%, nearly one-fourth of Americans defined as “employed” by BLS standards did not have a job above the poverty line, so they were “functionally unemployed.”

TRU also reveals some somber statistics when broken down by race, with inequalities exacerbated by the coronavirus pandemic. TRU peaked in April, with a rate of 36.85 for Black Americans, compared to a 30.86 rate for Whites. By August, the White TRU had recovered to 23.28%, while the Black TRU had recovered only slightly, to 34.77%.

“This new True Rate of Unemployment statistic can serve as a tool for policymakers to better understand the real state of the labor force and appropriately formulate policy and direct resources,” Ludwig said. 

Gene Ludwig is the CEO of Promontory Financial Group, and Chairman and CEO of Promontory MortgagePath, a technology-based mortgage fulfillment and solutions company, and authored The Vanishing American Dream, released in September by Disruption Books. 

Flagstar helps Pontiac students with STEM program

Funding from community leaders combined with a new science, technology, engineering and mathematics (STEM) curriculum informed by industry partners is trying to inspire a new generation of housing professionals. 

The Flagstar Bank Foundation teamed up with the Ralph C. Wilson Foundation and the Community Foundation for Southeast Michigan to support a STEM initiative that aims to inspire and facilitate manufacturing and engineering education and career opportunities at Pontiac High School in Oakland County, Michigan.

Headquartered in Southfield, Mich., the Flagstar Foundation contributed significant funding that comes as a part of its $10 million investment in Pontiac to support career and workforce readiness. 

The SME Education Foundation PRIME initiative, implemented through the SME Education Foundation, will assist the school’s more than 1,000 students. 

These students have diverse backgrounds, many are from economically disadvantaged circumstances and often underrepresented in STEM fields, said Suzanne Kavanaugh, PhD, principal of Pontiac High School. “The SME Education Foundation PRIME schools program creates new pathways and opportunities for these students to explore futures in both industry and ongoing education.”

The philanthropic arm of SME is a nonprofit that has been empowering young people to pursue manufacturing and engineering jobs in North America for over 90 years. The SME Foundation awards millions of dollars in scholarships every year to undergraduate and graduate students. 

The Pontiac SME PRIME program participants will benefit from training and access to advanced manufacturing equipment, industrial maintenance, computer-aided design, manufacturing and additive manufacturing. The initiative tapped on regional market research analysis data from several local partners, “to shape and form a curriculum that aligns with identified job opportunities.” 

The SME PRIME schools’ initiative will continue to expand the program across the country, said Rob Luce, SME Education Foundation vice president.

“We look to this program to help improve the local economy by offering students the chance to graduate from high school ready for the workforce,” said Beth Correa, head of corporate responsibility at Flagstar and managing director of the Flagstar Foundation, this is another way to help revitalize local communities.

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