SOURCE: Freddie Mac

Freddie Mac

August 03, 2015 11:21 ET

Freddie Mac Guarantees First Multifamily Small Balance Loan Securitization

MCLEAN, VA--(Marketwired - Aug 3, 2015) - Freddie Mac (OTCQB: FMCC) Multifamily today expanded its credit risk transfer program by announcing a new type of Multifamily mortgage-backed security, SB Certificates, which are backed by small balance loans underwritten by Freddie Mac and issued by a third-party trust. The company expects to guarantee approximately $108 million in the first series of SB Certificates (SB1 Certificates), which are anticipated to price the week of August 3, 2015, and settle on or about August 18, 2015.

"We continue to expand our credit risk transfer programs by introducing new products and features including this new Small Balance Loan program," said Mitchell Resnick, vice president of Freddie Mac Multifamily Capital Markets. "With SB-Deals, we are once again selling the first loss position, thereby selling substantially all of the credit risk associated with these small balance loans. We are introducing a new product to bond investors, one that will further assist Freddie Mac in providing affordable rental housing in the country."

The Small Balance Loan (SBL) origination initiative was first announced in October 2014, and expands the company's continuing effort to better serve less populated markets and provide additional liquidity to smaller apartment properties. Loans in the program generally range from $1 million to $5 million and have five or more units. Freddie Mac has a specialty network of Seller/Servicers and SBL lenders with extensive experience in this market who source loans across the country. Freddie Mac purchases and aggregates loans by seller and will then securitize each seller's deals when pool sizes are approximately $100-$125 million.

For the SB1 Certificates, Wells Fargo Securities, LLC will operate as Sole Lead Manager and Bookrunner. Greystone Servicing Corporation, Inc. originated the 44 small balance multifamily mortgages that are underwritten by Freddie Mac and that back the SB1 Certificates.

Freddie Mac is guaranteeing senior securities issued by the FRESB 2015-SB1 Mortgage Trust, and is acting as mortgage loan seller and master servicer. The third-party trust will also issue certificates consisting of the Class B, X2 and R Certificates, which will not be guaranteed by Freddie Mac and will be sold to private investors. The SB1 preliminary offering circular is available at http://www.freddiemac.com/mbs/data/sb001oc.pdf.

This announcement is not an offer to sell any Freddie Mac or other issuer's securities. Offers for any given security are made only through applicable offering circulars and related supplements, which may incorporate Freddie Mac's Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission (SEC) on February 19, 2015; all other reports Freddie Mac filed with the SEC pursuant to Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) since December 31, 2014, excluding any information "furnished" to the SEC on Form 8-K; and all documents that Freddie Mac files with the SEC pursuant to Sections 13(a), 13(c) or 14 of the Exchange Act, excluding any information furnished to the SEC on Form 8-K.

Freddie Mac's press releases sometimes contain forward-looking statements. A description of factors that could cause actual results to differ materially from the expectations expressed in these and other forward-looking statements can be found in the company's Annual Report on Form 10-K for the year ended December 31, 2014, and its reports on Form 10-Q and Form 8-K, filed with the SEC and available on the Investor Relations page of the company's Web site at www.FreddieMac.com/investors and the SEC's Web site at www.sec.gov.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four home borrowers and is one of the largest sources of financing for multifamily housing. Additional information is available at FreddieMac.com, Twitter @FreddieMac and Freddie Mac's blog FreddieMac.com/blog.