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Freddie Securitizing Re-Performing Mortgages

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More than a billion dollars in single-family loans that were previously non-performing are being moved from Freddie Mac’s balance sheet to a securitized trust.

On Wednesday, the Federal Home Loan Mortgage Corp. announced that approximately $1.45 billion in re-performing loans are being securitized through its Seasoned Loans Structured Transaction program.

The transaction is the fifth SLST issuance since the program’s 2016 launch and the biggest SLST securitization this year for the McLean, Virginia-based organization.

Included in the pool are primarily re-performing modified loans and moderately delinquent loans.

After the right to purchase the subordinate non-guaranteed certificates is auctioned off, a Freddie Mac-created trust will securitize the loans and issue senior and subordinate certificates. It’s only the second time a Freddie-created trust will be the issuer of the SLST transaction.

“Freddie Mac will guarantee, and may initially retain the guaranteed security issued from such securitization,” the statement said. “The winner of the auction will purchase the subordinate certificates at closing.”

Freddie is removing the loans from its $236 billion investment portfolio.

Citigroup Global Markets Inc., Wells Fargo Securities LLC and Samuel A. Ramirez & Company Inc. are acting as advisors to Freddie in the transaction.

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