Freddie May Tap Mezzanine Lenders to Refinance Multi-Family
Government-sponsored enterprise (GSE) Freddie Mac (FRE) is considering partnering with mezzanine lenders in a program that would provide refinancing for multi-family properties, sources confirmed to HousingWire. Mezzanine financing represents a source of supplementary financing, where the lender's recourse in the event of default is typically an equity interest in the company borrowing funds. Mezzanine financing, which is by nature provided relatively quickly, is often accompanied by little due diligence. Under the program Freddie is considering, mezzanine financing would be provided by a third party and the GSE would work with several mezzanine providers, according to Freddie spokesperson Patricia Boerger. She added the program would act as a mezzanine debt solution for the refinancing of over-leveraged apartment properties. "[I]t's something we are looking into and haven't finalized," Boerger told HousingWire. Although she said Freddie was not currently granting comprehensive press interviews about the program, she told the NASDAQ Institutional Investor: "There is a market need for this. It is part of our mission to keep the market liquid and capital flowing." The mezzanine program would broaden available funding for the GSE's multi-family business. Freddie's multi-family mortgages remained at 0.15% in January, unchanged from December, according to a monthly volume summary. Single-family delinquencies also rose at the GSE, to 4.03% in January, up from 3.87% in December. Write to Diana Golobay. Disclosure: The author held no relevant investment position.