Freddie Mac Prices First Offering of Certificates Backed by Single-Family Rentals
MCLEAN, VA–(Marketwired – Dec 7, 2017) – Freddie Mac (OTCQB: FMCC) today expanded its support for affordable housing with a new series of credit risk transfer securities backed predominantly by single-family rental (SFR) properties that are overwhelmingly affordable for low-income and working families.
SR Certificates are backed by mortgages secured primarily by single-family rental housing properties (SFR Loans). In this inaugural offering, the company expects to issue approximately $161 million in SR01 certificates, which includes 59 loans originated primarily by CoreVest American Finance Lender LLC. The SR Certificates are expected to settle on or about December 18, 2017.
“We are pleased to announce another securitization capability that will bring liquidity, stability and affordability to a market that is fragmented but vital to the nation’s housing landscape,” said Robert Koontz, vice president of Multifamily Capital Markets. “Consistent with our multifamily mission, this inaugural transaction is an important step in ensuring an ample supply of affordable rental housing.”
Of the 2,355 properties included in this transaction, 94% are affordable to families earning less than 100% of area median income (AMI). In addition, 71% are affordable to low-income families earning less than 80% AMI and more than 12% affordable to families earning 50% of AMI or less. The loans were not underwritten by Freddie Mac at the time of origination but meet the company’s current underwriting standards.
“Today, Freddie Mac Multifamily has taken another important step to increase the availability of affordable rental housing in communities across the country,” said David D. Leopold, vice president of targeted affordable sales & investments at Freddie Mac Multifamily. “Single-family rentals provide an important alternative for the millions of families looking for options beyond rental apartments who may not have the means to — or choose not to — purchase a home. We are using our multifamily financing capability to help meet this critical need and ensure that as families grow, their homes can grow with them.”
SR01 Certificates Pricing
Notional Amount (mm)
|Weighted Average Life (Years)||Spread (bps)||Coupon||Yield||Dollar Price|
|A-1||$20.272||3.06||S + 23||2.3570%||2.3151%||$99.9981|
|A-2||$93.571||4.62||S + 33||2.7500%||2.4919%||$100.9980|
|A-3||$47.266||9.36||S + 64||3.0890%||2.9601%||$100.9939|
- Co-Lead Managers and Joint Bookrunners: Morgan Stanley & Co. LLC and Wells Fargo Securities, LLC
- Co-Managers: Drexel Hamilton, LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated
- SR01 Offering Circular Supplement www.freddiemac.com/mbs/data/sr01oc.pdf
- Freddie Mac Multifamily Investor Presentation [pdf]
- Multifamily Securities Investor Access database of post-securitization data from Investor Reporting Packages
The SR01 Certificates include three senior principal and interest classes, and one interest only class. The SR01 Certificates are backed by corresponding classes issued by the CoreVest American Finance 2017-2 Trust and guaranteed by Freddie Mac. The CoreVest American Finance 2017-2 Trust will also issue Class B, Class M and Class R Certificates, which will not be guaranteed by Freddie Mac and will not back any class of SR01 Certificates.
Freddie Mac Multifamily is a leading issuer of agency-guaranteed structured multifamily securities. SR Certificates are part of the company’s business strategy to transfer a portion of the risk of losses away from taxpayers and to private investors who purchase the unguaranteed subordinate bonds.
This announcement is not an offer to sell any securities of Freddie Mac or any other issuer. Offers for any given security are made only through applicable offering circulars and related supplements, which incorporate Freddie Mac’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission (SEC) on February 16, 2017; all other reports Freddie Mac filed with the SEC pursuant to Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) since December 31, 2016, excluding any information “furnished” to the SEC on Form 8-K; and all documents that Freddie Mac files with the SEC pursuant to Sections 13(a), 13(c) or 14 of the Exchange Act, excluding any information furnished to the SEC on Form 8-K.
Freddie Mac’s press releases sometimes contain forward-looking statements. A description of factors that could cause actual results to differ materially from the expectations expressed in these and other forward-looking statements can be found in the company’s Annual Report on Form 10-K for the year ended December 31, 2016, and its reports on Form 10-Q and Form 8-K, filed with the SEC and available on the Investor Relations page of the company’s Web site at www.FreddieMac.com/investors and the SEC’s Web site at www.sec.gov.
Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we’ve made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.