Fannie Mae sold 919 deeply delinquent home loans carrying $203.3 million of unpaid principal balance in its twenty-eighth non-performing loan auction, and the bidding cleared above the loans’ remaining balance.
The winning bidder was Residential Credit Opportunities Trust IX-D, Fannie Mae said in a Sept. 21 announcement. The transaction is expected to close by Nov. 4. BofA Securities marketed the pool.
Fannie Mae does not disclose the winning price. It does publish the cover bid β the second-highest offer β which came in at 100.375% of unpaid principal balance, or 48.56% of the properties’ estimated value. Because the winner outbid that, the pool changed hands for more than the loans owe.
At the twenty-seventh sale, awarded Aug. 5, 2025, the cover bids on the two pools offered were 99.66% and 99.82% of unpaid balance, both below face value. That sale was larger, at 1,304 loans and $285 million. Because Fannie Mae publishes cover bids rather than winning bids, the comparison is between runner-up offers, not between what the winners paid.
Why delinquent loans fetched more than par
The answer is in the pool’s characteristics, which Fannie Mae published alongside the result. The 919 loans carry an average balance of $221,222 and a weighted average note rate of 4.31%. Their weighted average loan-to-value ratio, measured against broker’s price opinions, is 48%.
Those borrowers owe less than half of what their homes are estimated to be worth, at coupons far below today’s market: Freddie Mac’s Primary Mortgage Market Survey put the 30-year fixed rate at 6.95% for the week ended Sept. 17, up from 6.76% a week earlier and 6.26% a year ago.
On our reading, that combination is what makes a bid above face value rational rather than reckless. A buyer is acquiring a below-market coupon and, behind it, collateral appraised at roughly twice the debt. Even a loan that never returns to paying is backed by equity deep enough to absorb the workout.
The same arithmetic is showing up across the market. Mortgage-performance data this summer put homeowner equity at a record $18 trillion even as delinquencies and foreclosure starts climbed β rising distress inside a housing stock that has rarely carried more cushion.
What the pool looked like a month ago
Fannie Mae announced the sale on Aug. 19, when the larger pool held roughly 943 loans totaling $207.4 million. Bids were due Sept. 15. By award, it had shrunk to the 919 loans and $203.3 million reported this week.
A second, smaller piece of the August offering has not been awarded. The twenty-eighth Community Impact Pool β about 26 loans totaling $6.7 million, secured by properties in the Dallas-Fort Worth area β carried a later bid deadline of Sept. 23.
The conditions that travel with the loans
Whoever buys a Fannie Mae non-performing loan inherits servicing obligations attached to the paper. Buyers must honor loss-mitigation efforts already approved or in process at the time of sale, including loan modifications. Before starting a foreclosure on any loan not secured by vacant or condemned property, they must offer the borrower a waterfall of alternatives, which Fannie Mae says may include principal forgiveness.
If a foreclosure cannot be prevented, the property must be marketed first to owner-occupants and nonprofits β a requirement Fannie Mae describes as similar to its FirstLook program β before investors are offered it.
Those terms are the trade-off at the center of these auctions. Selling deeply delinquent loans moves credit risk off Fannie Mae’s books and hands the workout to buyers with more latitude than a regulated servicer, while the conditions are meant to keep the transfer from becoming a foreclosure pipeline.
Workouts remain an active part of the system. FHFA reported earlier this year that permanent modifications at Fannie Mae and Freddie Mac rose 4.7% in April as forbearance rules shifted.
