Freddie Mac Adds Multifamily Arms to Securitization Path

News provided by

Freddie Mac

Jun 03, 2011, 12:00 ET

MCLEAN, Va., June 3, 2011 /PRNewswire/ -- Freddie Mac (OTC: FMCC) is making another financing product eligible for its multifamily Capital Markets Execution(SM) (CME). Beginning today, adjustable rate mortgages are eligible for securitization into K Certificates, Freddie Mac multifamily mortgage-backed securities.

News Facts

  • In the last two years Freddie Mac has made student housing loans, seniors housing loans, conventional structured finance pools and Targeted Affordable Housing loans eligible for CME.
  • CME is the multifamily mortgage loan execution path. The Freddie Mac multifamily mortgage-backed securities -- K Certificates -- are backed by selected loans purchased through CME.
  • CME offers greater certainty of execution and lower risk-based pricing compared to loans the company holds in its portfolio.
  • Freddie Mac has a growing pipeline of CME loans, which comprised more than 70 percent of its multifamily funding volume in the last 15 months.

Quotes

David Brickman, senior vice president of Multifamily for Freddie Mac.

  • "CME continues to expand liquidity in the multifamily capital marketplace by creating a reliable, competitively priced source of financing through our deep pool of capital providers. With our growing pipeline of CME loans, we've become a reliable and consistent issuer of K Certificates, multifamily mortgage-backed securities."
  • "Since we began offering K Certificates backed by CME loans, we've opened up the capital markets to commercial mortgage backed securities issuances through 13 offerings totaling more than $14 billion."

Product Information

  • Through CME, Freddie Mac buys mortgages secured by multifamily properties from its lender network.  Freddie Mac typically will pool the loans, securitize them through a broker/dealer and offer securities to the market.
  • CME was introduced in April 2008 for conventional mortgages, with the June 2009 settlement of the first securitization of K Certificates, multifamily mortgage-backed securities.
  • In the first five months of 2011, Freddie Mac brought to market six K Certificate transactions with an issuance size of about $1 billion each. To date, Freddie Mac has settled $14 billion in K Certificates since its first issuance in 2009.

Since the launch of Freddie Mac's multifamily business in 1993, it has provided more than $243 billion in financing for approximately 57,000 multifamily properties.

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.  Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.  www.FreddieMac.com

SOURCE Freddie Mac

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