The Federal Housing Finance Agency released a set of new rules for the sale of troubled mortgages by Fannie Mae and Freddie Mac.

FHFA, which oversees the government-sponsored enterprises, will require prospective investors to prove they've retained a loan servicer with a track record of handling delinquent debt, the agency said in a statement Monday. Servicers also will have to offer aid to avoid foreclosures as a condition of sale.

Fannie Mae and Freddie Mac are under orders from FHFA to reduce their holdings of delinquent loans. Freddie Mac has auctioned off more than $1 billion in deeply delinquent debt since July in two separate bulk sales. Fannie Mae hasn't yet conducted any bulk auctions of defaulted mortgages.

With the new requirements, "sales by Freddie Mac and Fannie Mae will result in more favorable outcomes for borrowers and local communities, while also reducing losses to the enterprises and, therefore, to taxpayers," FHFA Director Mel Watt said in the statement.

The companies have been saddled with soured mortgages, bought from bonds the company guaranteed, after a wave of defaults in the housing crash.

Demand for defaulted mortgages increased last year, when Freddie Mac held its first loan sale, as Wall Street firms sought to profit from rising home prices. Banks and the Department of Housing and Urban Development were the biggest sellers of the debt.

Investment firms including Lone Star Funds, One William Street Capital Management and Ellington Management Group have been buying bad home loans as foreclosures diminish and the housing market recovers, pushing up prices of the debt.

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