Freddie Mac Multifamily K-Deals Surpass Half-Trillion Mark

Rhea-AI Summary

Freddie Mac (OTCQB: FMCC) has reached a significant milestone in its K-Deal securitization program, surpassing $500 billion in issuance volume with the settlement of K-F135. This innovative program, initiated in 2009, has transformed Freddie Mac Multifamily's operations by transferring credit risk to investors. Notably, 99.97% of loans securitized through K-Deals remain current, showcasing the program's success. In 2021 alone, Freddie Mac executed 67 deals totaling $63.5 billion. K-Bonds are recognized as leading benchmarks in the multifamily securities market.

Positive

• K-Deal issuance volume surpassed $500 billion, indicating strong market confidence.
• 99.97% of loans securitized through K-Deals are current, with no realized credit losses.
• 67 K-Deals priced in 2021 generated a total issuance of $63.5 billion.
• K-Bonds are the most liquid and tradable multifamily securities, enhancing market attractiveness.

Negative

• None.

Securitization Revolutionized the Company’s Multifamily Business

MCLEAN, Va., May 12, 2022 (GLOBE NEWSWIRE) -- Freddie Mac (OTCQB: FMCC) K-Deal® securitization issuance volume today surpassed the $500 billion mark with the settlement of K-F135. The K-Series, which began in earnest in 2009, revolutionized how Freddie Mac Multifamily conducts business, moving the agency from being a portfolio lender to one that transfers credit risk to third-party investors.

“The K-Deal has been key to Freddie Mac Multifamily’s growth for more than a decade,” said Robert Koontz, senior vice president of Freddie Mac Multifamily Capital Markets. “It’s a simple and straightforward execution with a track record of virtually no credit losses. With a half-trillion in volume to date, K-Bonds are also the most liquid and tradeable multifamily securities around and have become a benchmark security for the industry.”

Since 2009, Freddie Mac has settled 485 separate K-Deals totaling $500.5 billion in issuance volume. The growth in Freddie Mac’s K-Deal volume has accelerated in recent years along with record production volumes. In 2021, the firm priced 67 fixed- and floating-rate deals with a total issuance of $63.5 billion. K-Deals have enjoyed a continually growing and dedicated investor base. Nearly 1,000 separate investors have participated since the creation of the program.

K-Deals feature a range of investor options with stable cash flows and a structured credit enhancement. The tranches include Freddie Mac guaranteed senior principal and interest and interest-only classes, with underlying private label trusts offering unguaranteed subordinate bonds.

At present, 99.97% of loans securitized through K-Deals are current as measured by outstanding principal balance. Freddie Mac has not to date realized any credit losses on K-Deal guarantees.

More information about the K-Deal structure and performance are available here: https://mf.freddiemac.com/investors/k-deals.html.

Freddie Mac Multifamily is the nation's multifamily housing finance leader. Historically, more than 90% of the eligible rental units we fund are affordable to families with low-to-moderate incomes earning up to 120% of area median income.   Freddie Mac securitizes about 90% of the multifamily loans it purchases, thus transferring the majority of the expected credit risk from taxpayers to private investors.

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: Mike Morosi
(703) 918-5851
Michael_Morosi@FreddieMac.com

FAQ

What does the recent press release about FMCC's K-Deal securitization highlight?

The press release highlights the surpassing of $500 billion in K-Deal securitization issuance volume.

What percentage of loans are current in Freddie Mac's K-Deals?

99.97% of loans securitized through K-Deals are current, indicating strong performance.

How many K-Deals were settled by Freddie Mac in 2021?

Freddie Mac settled 67 K-Deals in 2021, amounting to $63.5 billion in issuance.

What is the significance of K-Bonds in the multifamily securities market?

K-Bonds are recognized as the most liquid and tradable multifamily securities, setting benchmarks in the industry.

When did the K-Series securitization program begin?

The K-Series securitization program began in earnest in 2009.