Freddie Mac Sells $428 Million in Nonperforming Loans, Awarding Four Pools to Two Buyers
Freddie Mac’s latest sale of deeply delinquent mortgages highlights how the government-sponsored enterprise manages distressed assets, transfers mortgage credit exposure and uses investor demand to move troubled loans out of its investment portfolio. The transaction involves 1,968 residential first-lien loans with an aggregate balance of approximately $428 million. Announced October 8, 2026, the sale covers four pools awarded to two winning bidders, with settlement expected in December. Freddie Mac
By Ira Margolis · 6 min read
How Freddie Mac’s $428 million loan sale is structured
The four pools contain loans secured by properties across the United States. Freddie Mac reported the following breakdown in its announcement:
Freddie Mac
Pool | Unpaid principal balance | Number of loans | Average months delinquent |
|---|---|---|---|
1 | $189.0 million | 911 | 17 |
2 | $128.3 million | 608 | 15 |
3 | $71.4 million | 296 | 21 |
4 | $39.3 million | 153 | 18 |
Total | $428.0 million | 1,968 | — |
The two winning bidders are VRMTG ACQ LLC, which won the first three pools, and Igloo Series VII Trust, which won the fourth. VRMTG acquired approximately $388.7 million in unpaid principal balance across 1,815 loans, while Igloo acquired approximately $39.3 million across 153 loans.
Freddie Mac
The figures show that the transaction is concentrated in three larger pools, with the fourth offering a smaller portfolio to a separate buyer.
What the loan data reveal about collateral risk
Freddie Mac disclosed two measures of combined loan-to-value ratio, or CLTV, for each pool. CLTV compares the mortgage debt and any other relevant property-secured debt with the property's estimated value.
The company reported broker price opinion-weighted CLTV ratios of 50%, 49%, 67% and 65% across the four pools. Using unpaid principal balance-weighted CLTV, the corresponding figures were 61%, 59%, 74% and 74%.
Freddie Mac
These measures provide different perspectives on collateral exposure. The broker price opinion-weighted measure reflects property valuations weighted by the number of loans, while the unpaid principal balance-weighted measure gives more influence to loans with larger balances.
The distinction matters to investors assessing distressed mortgage portfolios. A lower CLTV generally indicates a larger estimated equity cushion, all else equal, but it does not guarantee that a loan can be recovered without a loss. Actual outcomes depend on property values, lien priority, foreclosure expenses, servicing costs and the time required to resolve delinquency.
The data also show that the loans have been delinquent for an extended period. Average delinquency ranged from 15 to 21 months across the four pools. That makes borrower resolution, property valuation and servicing execution important considerations for the purchasers.
More than half of the pool balance involves previously modified mortgages
Approximately 51% of the aggregate pool balance consists of mortgages that were modified previously and subsequently became delinquent again, according to Freddie Mac. The company said borrowers in the portfolios likely had already been evaluated for loss mitigation, including loan modifications or alternatives to foreclosure, or were in foreclosure.
Freddie Mac
A loan modification changes one or more mortgage terms to make repayment more manageable. A borrower who becomes delinquent again after a modification may require another assessment of available options, depending on the circumstances and applicable requirements.
The share of previously modified loans is therefore an important indicator for buyers evaluating the portfolios. It suggests that some borrowers have already undergone an earlier intervention, although the release does not provide enough loan-level information to determine why those arrangements failed or what options remain available to individual homeowners.
Importantly, a nonperforming loan sale does not automatically mean every borrower will lose a home. Outcomes can vary, and the transaction's servicing requirements preserve important borrower protections.
What protections apply after the sale?
Freddie Mac said purchasers must honor the terms of existing loss mitigation agreements, solicit distressed borrowers for additional assistance except in limited cases, and complete pending loss mitigation actions.
Freddie Mac
Those requirements are significant because the sale transfers the loans to new investors without eliminating the stated obligations tied to borrower assistance.
The Federal Housing Finance Agency also maintains requirements governing the servicing of nonperforming-loan transactions involving government-sponsored enterprises. Freddie Mac describes its seasoned-loan program as a way to reduce less-liquid assets in its investment portfolio while supporting borrower outcomes and community stability.
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For homeowners whose mortgages are included in a sale, the practical implications will depend on their individual loan status, existing agreements and subsequent servicing activity. The announcement does not identify individual borrowers or provide a loan-by-loan account of future resolution plans.
Why Freddie Mac sells nonperforming loans
Freddie Mac's seasoned-loan offerings are designed to reduce less-liquid assets in its mortgage-related investments portfolio through several approaches, including nonperforming-loan sales and transactions involving reperforming loans.
Reperforming loans are mortgages that have returned to making scheduled payments after a period of delinquency. Nonperforming-loan sales, by contrast, transfer deeply delinquent loans to investors prepared to manage the associated servicing and recovery risks.
Freddie Mac reported that, since 2011, it had sold $11.4 billion in nonperforming loans and securitized approximately $81.7 billion in reperforming loans through several programs.
Freddie Mac
That history places the October transaction within a longer-running portfolio-management strategy rather than an isolated response to a single market event.
For Freddie Mac, the approach can help convert distressed assets into cash proceeds and reduce the amount of less-liquid mortgage exposure it holds. For purchasers, the attraction is the opportunity to acquire loans at prices reflecting delinquency, collateral and resolution risk.
Neither outcome guarantees a particular financial result. The economics depend on the purchase price, eventual borrower payments, collateral recovery, operating expenses and other factors.
What happens next?
Freddie Mac expects the four awarded pools to settle in December 2026. Separately, the company announced an Extended Timeline Pool Offering, or EXPO, for a smaller pool of nonperforming loans, with bids due from qualified investors by October 23, 2026.
Freddie Mac
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The additional offering gives qualified investors another opportunity to participate in Freddie Mac's seasoned-loan program, subject to its bidder and servicer approval requirements.
For mortgage servicers, distressed-loan investors and housing-market observers, the next milestones are settlement of the four awarded pools and the outcome of the additional offering. Borrower resolution requirements will remain a central consideration as the loans move to their new owners.
The broader takeaway is that Freddie Mac continues to use structured loan sales to manage distressed mortgage assets while imposing specific obligations on purchasers regarding existing loss mitigation arrangements and pending assistance actions. The transaction's ultimate significance will depend not just on the balance transferred, but also on how the loans are resolved after settlement.