Freddie Mac has begun securitizing certain performing modified loans held in the enterprise's mortgage-related investments portfolio.
These loans were modified to assist borrowers who were at risk of foreclosure, to stabilize markets and to mitigate losses. Loans need to be current for at least six consecutive months to be eligible for securitization.
The modified loans are pooled into new Freddie Mac Fixed-Rate Modified Participation Certificates (PC) with new "MA-MD" prefixes, the government-sponsored enterprises stated.
The loans are not TBA market deliverable and do not include loans modified through the Home Affordable Mortgage Program.
"As we continually seek to provide more transparency to the investment community, we are providing additional information on these securities which should aid in their valuation," said Neil Hughes, vice president and interim head of single-family securitization for Freddie Mac.
The GSE bought the vast majority of these loans out of its related PC when the loans were at least 120-days delinquent.
"Securitizing loans that have been modified and are now performing will allow Freddie Mac to better manage its mortgage-related investments portfolio," said Adama Kah, vice president of distressed assets management of Freddie Mac. "We are taking another important step that creates liquidity and taxpayer value for these modified loans through PC securitization. Freddie Mac's goal is to help families stay in their homes and provide alternatives to foreclosure."
In November 2011, Freddie Mac began securitizing previously delinquent, non-modified loans that it had repurchased from its related PCs, and that had been reinstated to current, performing loan status.