Freddie Mac has completed its first its multifamily credit risk transfer offering on a pool of $915 million, working with Aon, a reinsurance broker.

Freddie Mac has purchased credit risk insurance for the first 5 percent of credit losses on the deal, which includes 55 loans in enterprises Bond Credit Enhancement and Multifamily Participation Certificate program portfolios.

“This transaction is the first of many we hope to bring forward through the multifamily credit insurance pool initiative,” said Robert Koontz, senior vice president of Multifamily Capital Markets for Freddie. “This is yet another great credit risk transfer offering that complements and completes our existing suites of capital market executions. We have successfully delivered similar reinsurance offerings through our single-family business, and now we’re finding similar efficiencies on the multifamily side.”

The average loan balance in the pool is $16.6 million, and most of the 55 properties in the pool include rent-restricted units that are affordable to low- and very-low-income families, helping to fulfill Freddie Mac’s affordability mission.

Here’s how MCIP transactions work: Freddie Mac enters into long-term credit insurance contracts covering credit losses from existing multifamily loans in the company’s portfolio or bonds that Freddie Mac fully guarantees. The structure transfers a percentage of credit risk to reinsurers, helping reduce Freddie Mac’s need to hold capital for the underlying loans in the pool.

“This offering introduces a new form of credit risk transfer on Freddie Mac’s Multifamily loans,” said Victor Pa, vice president investments and advisory for Freddie Mac Multifamily. “Through long-term insurance contracts we can help alleviate pricing volatility and reduce execution uncertainties, allowing us to broaden our production capabilities on various types of loans that may be structurally more complicated or need longer time to aggregate. The bottom line is that we will be able to better manage risk and provide more liquidity for affordable rental housing, helping fulfill our mission.”