Sells $292 Million of Seasoned Loans After Successful Pilot
MCLEAN, VA--(Marketwired - Jun 20, 2017) - Freddie Mac (OTCQB: FMCC) today announced its second Freddie Mac Seasoned Loan Structured Transaction (SLST) -- via an auction of 1,262 seasoned re-performing loans (RPL) and moderately delinquent loans serviced by Select Portfolio Servicing, Inc. The transaction is expected to settle in July 2017. Freddie Mac, through its advisors, began marketing the transaction to potential bidders on May 17, 2017.
The SLST securitization program is a key part of Freddie Mac's seasoned loan offerings initiatives, which are designed to reduce less liquid assets in its mortgage-related investments portfolio and shed credit and market risk via economically reasonable transactions. The servicing of the loans will be in accordance with RPL requirements pdf, similar to FHFA's requirements pdf applicable to the sale of nonperforming loans (NPLs), which prioritize borrower retention options in the event of a default and promote neighborhood stability.
The transaction is a two-step structured sale of seasoned loans. The initial step involves the sale of loans via a competitive bidding process, subject to a securitization term sheet. In the second step, the purchaser of the loans will securitize the loans. Freddie Mac will guarantee and purchase the senior tranche of the securitization. The first loss subordinate tranche will be initially retained by the loan purchaser. A key requirement of this transaction is that the buyer of the loans, and therefore the subordinate tranche, be an investor with substantial experience in managing both performing and moderately delinquent mortgage loans as well as securitizing mortgage loans.
The collateral is comprised of fixed- and step-rate modified seasoned loans. These loans were modified to assist borrowers who were at risk of foreclosure to help them keep their homes. The aggregate pool is geographically diverse and has a loan-to-value ratio of approximately 101 percent, based on Broker Price Opinions (BPOs).
The pool, winning bidder and cover bid price (second highest bid), stated in the form of a whole loan bid, are summarized below. The indicative price assumes Freddie Mac purchases the guaranteed senior bond at par:
| Description | Pool | |
| Unpaid Principal Balance | $291.6 million | |
| Loan Count | 1,262 | |
| BPO CLTV (Weighted by BPO) | 101 | |
| Average Loan Balance ($000) | 231.1 | |
| Winning Bidder | Towd Point Master Funding, LLC | |
| Cover Bid Price (second-highest bid price) | High $70s | |
Advisors to Freddie Mac on this transaction are Wells Fargo Securities, LLC, Credit Suisse Securities (USA) LLC, and CastleOak Securities, L.P., a minority-owned business.
To date, Freddie Mac has sold $7 billion in nonperforming loans (NPLs), securitized $26 billion in RPLs, and transacted $2 billion in structured offerings of seasoned loans. Additional information about the company's seasoned loan offerings is available at http://www.freddiemac.com/seasonedloanofferings/index.html.
This announcement is not an offer to sell any Freddie Mac securities. 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 website.
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.
MEDIA CONTACT:
Lisa Gagnon
703-903-3385
Lisa_Gagnon@freddiemac.com
The financial and other information contained in the documents that may be accessed on this page speaks only as of the date of those documents. The information could be out of date and no longer accurate. Freddie Mac does not undertake an obligation, and disclaims any duty, to update any of the information in those documents. Freddie Mac's future performance, including financial performance, is subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect the company's future results are discussed more fully in our reports filed with the SEC.