Investments

Freddie Mac prepares to transfer risk on $2.3 billion in re-performing loans

Transaction to settle in mid November

Freddie Mac announced the pricing of its fourth seasoned credit risk transfer trust offering in 2019, a securitization of about $2.3 billion.

The pool is made up of about $2.1 billion in guaranteed senior and about $229 million in unguaranteed subordinate securities backed by a pool of seasoned re-performing loans.

The SCRT securitization program is a fundamental part of Freddie Mac’s seasoned loan offerings which reduce less liquid assets in its mortgage-related investments portfolio and sheds credit and market risk via economically reasonable transactions.

The transaction is expected to settle on November 14, 2019. The underlying collateral consists of 12,347 fixed- and step-rate, seasoned RPLs which were modified to assist borrowers who were at risk of foreclosure to help them keep their homes. As of the cutoff date, all the mortgage loans have been performing for at least 12 months.

The loans are serviced by Select Portfolio Servicing, and will be serviced under Freddie Mac’s requirements that prioritize borrower retention options in the event of default.

Advisors to this transaction include Wells Fargo Securities and Citigroup Global Markets as co-lead managers and joint bookrunners, and Bank of America Securities, Nomura Securities International, JPMorgan Securities and Samuel A. Ramirez & Company as the co-managers.

This brings Freddie Mac’s risk transfer to $8 billion in non-performing loans and securitized about $57 billion in re-performing loans.

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