With insights from Thomas Bohlmann, REOX Advisory Council--Technology and Innovation Advisor, Bohlmann & Bohlmann LLC

For those watching the foreclosure space and wondering why inventory seems scarce, one answer lies in the silent handoff of distressed assets before they ever hit the market. Many non-performing and reperforming loans are now sold in bulk to institutional investors through structured Fannie Mae Auctions--long before a formal foreclosure is filed.

Recent Loan Sales Tell the Story

Fannie Mae has ramped up its non-performing loan (NPL) and reperforming loan sales, transferring large volumes of at-risk mortgages to private equity firms and asset management companies.

These transactions move properties off the radar of typical brokers, agents, and even many servicers, diverting the foreclosure path into private hands--where loss mitigation or disposition is handled away from public view.

Who's Buying--and What Happens Next?

Entitiies acquiring these loans vary widely, from Wall Street-backed hedge funds to mission-driven nonprofits.

Fannie Mae actively promotes diversity among its buyers, including:

• Institutional Investors focused on distressed debt
• Nonprofits via Community Impact Pools (CIPs)
• Public Sector Organizations and Smaller Investors
• Minority-Owned and Women Owned Businesses (MWOBs)

Importantly, buyers must adhere to strict servicing and loss mitigation guidelines, including offering loan modifications and attempting to keep borrowers in their homes. If foreclosure is ultimately necessary, these sales prioritize owner-occupants and nonprofits as buyers—part of Fannie Mae’s goal to support neighborhood stabilization.

As a result, if you’re not seeing as many pre-foreclosures hit your desk, it’s not your imagination—many of those assets are being diverted earlier in the lifecycle through note sales and off-market workouts.

But that doesn’t mean you’re out of the picture. Understanding where the inventory is going—and who’s buying it—positions you to adapt. REOX is here to help you along the way.

Strengthen existing relationships with servicers, keep your profiles—particularly your REOX profile—up to date for asset managers, and look for opportunities with buyers of these loan pools who may eventually need local experts to manage, market, or dispose of properties that don’t resolve through modification. The REO pipeline isn’t gone. It’s evolving with you.

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