Freddie Mac Offloads $428 Million in Delinquent Home Mortgages Through Auction

Freddie Mac publicized on October 8, 2026, that it completed an auction disposing of 1,968 non-performing residential first-lien mortgages from its portfolio of mortgage-related investments.¹ The underlying debt across the aggregate transaction represents an unpaid principal balance of roughly $428 million.¹ The divestiture was executed under the enterprise's Standard Pool Offerings framework, commonly designated as SPO.¹ These non-performing assets were divided into four separate loan groupings supported by residential properties distributed across various geographic regions.¹ The entire batch consists exclusively of deeply delinquent accounts removed directly from the institution's retained investment book.¹

Supporting transaction records show that the four distinct pools comprise unpaid balances of $189.0 million, $128.3 million, $71.4 million, and $39.3 million, which collectively total the $428.0 million announced balance.¹ In parallel, the loan counts within those respective tranches are recorded as 911, 608, 296, and 153 accounts, matching the aggregate count of 1,968 obligations.¹ Average loan balances within individual pools ranged between $207.4 thousand and $256.9 thousand.¹ The auction resulted in VRMTG ACQ, LLC securing the winning allocations for Pool 1, Pool 2, and Pool 3, while Igloo Series VII Trust prevailed as the buyer for Pool 4.¹

Borrowers tied to these accounts have experienced severe, prolonged repayment disruptions, with average delinquency durations extending between 15 and 21 months across the pools.¹ Because of their prolonged delinquent standing, the homeowners have typically gone through prior loss mitigation assessments, such as loan restructuring attempts or other alternatives to foreclosure, or they are already undergoing formal foreclosure proceedings.¹ A notable characteristic of the collateral is that roughly 51 percent of the aggregate balance corresponds to mortgages that had been restructured in the past and subsequently slipped back into default.¹ This significant concentration of secondary defaults underscores the chronic repayment friction present across the transferred volume.¹

Underwriting metrics across the pools indicate that current loan-to-value ratios calculated against broker price opinions spanned from 49 percent to 67 percent.¹ When evaluated according to unpaid principal balances, the corresponding combined loan-to-value measures registered higher, falling between 59 percent and 74 percent.¹ Competitive bidding produced second-highest cover bids landing in the mid-80s to mid-90s range when measured as a percentage of unpaid principal balances.¹ These pricing marks reflect the discounted asset valuations assigned by participating distressed-debt buyers relative to face value.¹

The formal sale campaign commenced on September 16, 2026, when enterprise representatives and their appointed transaction advisors initiated outreach to prospective purchasers active within the non-performing debt marketplace.¹ Freddie Mac retained BofA Securities, Inc. alongside First Financial Network, Inc. to serve as external financial advisors throughout the auction process.¹ Following the selection of successful bidders, the enterprise anticipates that the multi-pool transaction will formally settle in December 2026.¹ In addition to this primary sale, Freddie Mac established an October 23, 2026, submission deadline for qualified participants seeking to bid on an upcoming Extended Timeline Pool Offering, or EXPO, which features a smaller quantity of residential debt.¹

Leading up to the transfer, the underlying loans have been handled by four licensed mortgage servicers: Select Portfolio Servicing Inc., NewRez LLC doing business as Shellpoint Mortgage Servicing, Selene Finance LP, and Rocket Mortgage, LLC doing business as Rushmore Servicing.¹ Entities purchasing the debt are contractually mandated to respect every active loss mitigation compact currently in place for covered borrowers.¹ Buyers are further required to proactively reach out to troubled borrowers with offers of supplementary aid, barring limited exceptions, while seeing through any unresolved relief procedures to completion.¹ Such servicing stipulations are incorporated specifically to support more constructive borrower results and foster neighborhood stability.¹

The tender forms part of Freddie Mac's established approach to seasoned debt, which emphasizes paring down less-liquid holdings in its investment book in an economically sound manner.¹ This portfolio management toolkit encompasses non-performing asset sales, securitization transactions for re-performing mortgages, and structured re-performing deals.¹ Measured from 2011 onward, the government-sponsored enterprise has divested $11.4 billion in non-performing assets.¹ Over that same timeframe, it has packaged roughly $81.7 billion of re-performing loans into structured products.¹ That re-performing volume includes $30.5 billion through fully guaranteed mortgage-backed securities, $37.6 billion under the Seasoned Credit Risk Transfer structure, and $13.6 billion through the Seasoned Loans Structured Transaction channel.¹

These capital management programs operate under Freddie Mac's broader corporate objective to foster homeownership access for households throughout the country while maintaining liquidity, stability, and affordability through every phase of the economic cycle.¹ Since its founding in 1970, the federally backed corporation has assisted tens of millions of families with purchasing, leasing, or retaining residential properties.¹ Shedding problematic, non-performing instruments is intended to protect the enterprise's capital position while shifting high-touch recovery servicing to specialized market participants.¹ This balance sheet hygiene supports the enterprise's overarching public mandate across shifting economic environments.¹

The loan auction materialized immediately after high-level personnel movements within Freddie Mac's executive risk oversight division.¹³ A regulatory filing submitted to the Securities and Exchange Commission confirmed that executive vice president and chief risk officer Anil Hinduja concluded his employment on October 1, 2026.³ Hinduja had directed enterprise risk functions since 2015, having originally been appointed chief enterprise risk officer under former chief executive Donald Layton.³ His mandate entailed monitoring organization-wide exposures spanning credit, market, liquidity, operational, model, and regulatory compliance categories.³ John Glessner, formerly the executive vice president of investments and capital markets, took over as chief risk officer on October 1, 2026, with his compensation remaining unchanged.³

Glessner has been with Freddie Mac since 2010, building extensive experience across senior posts in capital markets operations responsible for managing the firm's funding, hedging, and debt issuance tasks.³ Stepping into Glessner's previous purview, Kevin Cheng—who formerly functioned as senior vice president overseeing mortgage assets and risk transfer—was designated as senior vice president leading the investments and capital markets unit.³ Available evidence establishes that the $428 million asset sale and these risk management shifts were distinct corporate occurrences, with the staffing updates taking effect October 1 and the transaction disclosed on October 8, 2026.¹³ The entire organization has been guided by chief executive officer Kenny M. Smith, a certified public accountant who was chosen by the board of directors in December 2025.³ Smith arrived with 27 years of experience at Deloitte Consulting LLP, where he spent five years as vice chairman and leader of its U.S. financial services group, having previously acted as global lead client service partner for Wells Fargo & Co. between 2008 and 2019.³

The personnel turnover at Freddie Mac aligns with broader managerial changes currently reshaping federally backed housing agencies.³ Counterpart institution Fannie Mae dismissed a group of experienced staff members across multiple business divisions in August 2026.³ Those staff reductions represented the latest phase of leadership changes under Federal Housing Finance Agency Director and Fannie Mae board chairman Bill Pulte.³ Amid these administrative realignments, the government-sponsored enterprises continue offloading delinquent debt portfolios and enforcing structured asset-reduction programs.¹³