Pleased with the strong buy-side response to its first bulk offering of multi-family mortgages, Freddie Mac plans to roll out more portfolios of seasoned performing loans – but not right away. Mission Capital advised Freddie on the sale, which closed Oct. 3.
More Freddie Portfolio Sales Ahead
Pleased with the strong buy-side response to its first bulk offering of multi-family mortgages, Freddie Mac plans to roll out more portfolios of seasoned performing loans — but not right away.
The recent auction of the $194.8 million portfolio “was not a one-off ” transaction, said Michael Lipson, Freddie’s senior vice president of multi-family asset management and operations.
But the agency will likely wait until next year before sched- uling a second auction of loans from its huge balance sheet. Future sales will be held opportunistically, depending on mar- ket conditions and the agency’s ongoing asset-management strategies, Lipson said — unlike the guaranteed securitizations of newly originated, multi-family mortgages that Freddie floats every few weeks.
Some 23 banks, fund shops and other lenders submitted offers for Freddie’s initial bulk-loan offering, the agency an- nounced this week. After two rounds of bidding, Colony Capital of Santa Monica, Calif., walked away with the entire portfolio, paying roughly 90 cents on the dollar. Mission Capital advised Freddie on the sale, which closed Oct. 3. The mix of fixed- and floating-rate loans was split into two pools. One, with an aggre- gate balance of $171.2 million, consisted of 22 loans on multi- family and student-housing properties totaling 3,811 units. The other contained three loans, adding up to $23.6 million, on assisted-living facilities with a total of 453 beds.
The auction reflected the latest twist in long-running efforts by Freddie and Fannie Mae to comply with a mandate from their regulator, the Federal Housing Finance Agency, to reduce mortgage holdings. Both agencies have been operating under federal conservatorship since the height of the credit crisis in
2008. Before it could try a bulk loan sale, Freddie had to devel- op procedures and get approval from FHFA. “Now that we have it available as an execution model, we’ll look for opportunities to do it again,” Lipson said.
Freddie currently securitizes more than 95% of its origina- tions in the multi-family sector. The legacy loans sold to Colony were extracted from Freddie’s portfolio of unguaranteed multi-
family mortgages, which stood at $69.4 billion on June 30. That was down from $79.6 billion a year earlier and $85.9 billion at yearend 2010.
Lipson is overseeing the management and gradual disposi- tion of that relatively illiquid portfolio. Most of the reduction so far has been due to amortization and refinancings, he said. Virtually all of the multi-family loans in that balance-sheet portfolio are still performing, with only 0.05% of the overall balance delinquent by at least 60 days at the end of August.
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