SOURCE: Freddie Mac

Freddie Mac

December 11, 2013 14:57 ET

Freddie Mac Has Record Year for Multifamily Securities

MCLEAN, VA--(Marketwired - Dec 11, 2013) - Freddie Mac (OTCQB: FMCC) issued a record $28 billion in multifamily securities through 19 K-Deals this year, up from $21.2 billion and 17 K-Deals in 2012.

Highlights:

  • Continued to support affordable rental housing through securitization. More than 90 percent of the apartment units Freddie Mac finances are affordable to households earning the area median income, and most of those loans are securitized.
  • Issued $71.5 billion in multifamily securities through 56 K-Deals since the program started in 2009, which represents approximately $61 billion in guaranteed certificates and $10.5 billion in unguaranteed bonds.
  • Grew private investor base to more than 140 domestic and international investors. Typical investors are life insurance companies, banks, pension funds, money managers and hedge funds, some of whom assume first loss positions, reducing taxpayer risk.
  • Securitized more loans in 2013 than the Multifamily division purchased in 2013. While Freddie Mac's 2013 total volume will not be released until next year, the Federal Housing Finance Agency put an approximate $26 billion cap on multifamily new purchase volume this year.
  • Reduced taxpayer risk via the multifamily securitization structure, which enables Freddie Mac to sell the overwhelming majority of the credit risk to private capital investors.
  • Achieved a very low K-Deal delinquency rate of 1 basis point as of October 2013.
  • K-Deals will be included in the Barclays Aggregate U.S. and Global Bond indices as of June 30, 2014, which Freddie Mac expects to bolster demand for K-Deal securities.

"The primary financing mechanism for the multifamily industry is securitization, and we are the industry leader in that space," said Mitchell Resnick, Freddie Mac Multifamily vice president of loan pricing and securitization. "We are the most prolific issuer of CMBS backed by multifamily mortgages since the market crash in 2009."

Resnick added, "We look forward to the continued health of the multifamily market and for demand to remain strong in 2014. We expect to issue approximately $25 billion in multifamily securities across 15 to 20 K-Deals next year. However, this is dependent upon FHFA's guidance for 2014, which has not yet been announced.

"Freddie Mac is a leader in introducing innovative ways to attract new sources of capital and reduce taxpayer risk. The success of the Multifamily securities program was an impetus for Freddie Mac to create and issue two Structured Agency Credit Risk (STACR) debt notes transactions in 2013 to further reduce its credit exposure and bring private capital to the residential mortgage market. Freddie Mac Multifamily will strive to preserve taxpayer investment in the GSEs while Congress and FHFA decide on a future state for the agency rental housing finance platform."

This announcement is not an offer to sell any Freddie Mac securities. Offers for any given security are made only through applicable offering circulars and related supplements, which incorporate Freddie Mac's Annual Report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission ("SEC") on February 28, 2013; 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, 2012, 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, 2012, 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 homebuyers and is one of the largest sources of financing for multifamily housing. www.FreddieMac.com. Twitter: @FreddieMac