Freddie Mac issued a company record $72.8 billion of multifamily securities in 2018, which were designed to move risk to private investors from taxpayers.
“With our diverse array of securities, including our flagship K Deals, we continue pioneering efforts to meet
[caption id="attachment_7455" align="alignright" width="300"]
Debby Jenkins[/caption]
private sector demand for investment products while shifting risk away from taxpayers,” said Debby Jenkins, executive vice president and head of Freddie Mac Multifamily. “As we look to the future, we’re going to continue pushing for more innovations that can lower capital cost for borrowers, making rental housing more affordable.”
Contributing to the $72.8 billion total securitization, the company settled:
- $61.6 billion in K Deals, which feature stable cash flows and a structured credit enhancement and include guaranteed senior and interest only classes.
- $7.0 billion in SB Deals, which guarantees senior classes of securities issued by third-party trusts and backed by Multifamily Small Balance Loans.
And $4.2 billion split among the following types of deals:
- KT Certificates which are backed by multifamily mortgage loans that will be sold into K-Series securitizations and transfer a portion of the risk associated with the loans.
- Multifamily PCs which are secured by structures with five or more units designed for residential use, with terms ranging from five to 30 years.
- Q Certificates which are structured pass-through securities backed by multifamily mortgage loans and backed by an underlying trust that holds multifamily mortgage loans that weren’t underwritten or purchased by Freddie Mac prior to securitization.
- M Certificates which are guaranteed tax-exempt and taxable securities supported by pools of un-enhanced tax-exempt and taxable multifamily housing collateral and,
- ML Certificates which are a new, more efficient and cost-effective alternative to financing stabilized affordable multifamily properties with 4% Low-Income Housing Tax Credits.
Freddie Mac Multifamily’s securitization program moves the vast majority of risk away from the company and taxpayers to private investors. The Federal Housing Finance Agency’s second quarter 2018 Credit Risk Transfer Progress Report found that through the first half of 2018, Freddie Mac has transferred 86 percent of its multifamily credit risk.
