Freddie Mac Prices Approximately $1.0 Billion Securitization of Re-Performing Loans

Rhea-AI Summary

Freddie Mac (OTCQB: FMCC) announced the pricing of its second Seasoned Credit Risk Transfer Trust (SCRT) offering for 2021, totaling approximately $1.0 billion. This securitization includes $936 million in guaranteed senior certificates and $65 million in unguaranteed subordinate securities backed by seasoned re-performing loans (RPLs). The loans have been performing well, with only 0.38% on a forbearance plan. The transaction is set to settle on June 15, 2021. Freddie Mac has previously securitized over $72 billion in RPLs, bolstering its portfolio while reducing risk.

Positive

• The SCRT offering of $1.0 billion enhances liquidity and reduces credit risk.
• $936 million in guaranteed senior certificates indicates strong investor confidence.
• Only 0.38% of loans in forbearance, reflecting low delinquency rates.

Negative

• None.

MCLEAN, Va., June 09, 2021 (GLOBE NEWSWIRE) -- Freddie Mac (OTCQB: FMCC) today announced pricing of the second Seasoned Credit Risk Transfer Trust (SCRT) offering of 2021—a securitization of approximately $1.0 billion including both guaranteed senior and unguaranteed subordinate securities backed by a pool of seasoned re-performing loans (RPLs). The SCRT securitization program is a fundamental part of Freddie Mac's seasoned loan offerings which reduce less liquid assets in its mortgage-related investments portfolio and shed credit and market risk via economically reasonable transactions.

Freddie Mac Seasoned Credit Risk Transfer Trust, Series 2021-2 includes approximately $936 million in guaranteed senior certificates and approximately $65 million in unguaranteed mezzanine and subordinate certificates. The mezzanine certificates will be rated. The transaction is expected to settle on June 15, 2021. The underlying collateral consists of 8,927 fixed-, step-, and adjustable-rate, never modified and modified seasoned RPLs, which were modified to assist borrowers who were at risk of foreclosure to help them keep their homes. Consistent with SCRT program criteria, as of the cut-off date, all the mortgage loans, including approximately 0.38% on a forbearance plan, have been performing and have not been delinquent for at least the prior 6 months using the MBA method of calculation.

The loans are serviced by Select Portfolio Servicing, Inc. and will be serviced in accordance with requirements that prioritize borrower retention options in the event of default and promote neighborhood stability.

Advisors to this transaction are J.P. Morgan Securities LLC and Citigroup Global Markets Inc. as co-lead managers and joint bookrunners, and Amherst Pierpont Securities LLC, BofA Securities, Inc., Nomura Securities International, Inc., StoneX Financial Inc., and R. Seelaus & Co., LLC (a woman-owned business) as the co-managers.

To date, Freddie Mac has sold over $8 billion of Non-Performing Loans (NPLs) and securitized more than $72 billion of RPLs consisting of $30 billion of fully guaranteed PCs, $31 billion of SCRT senior/sub securitizations, and nearly $11 billion of Seasoned Loans Structured Transaction (SLST) offerings. Additional information about the company's seasoned loan offerings can be found at: http://www.freddiemac.com/seasonedloanofferings/

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, 2020, filed with the Securities and Exchange Commission (SEC) on February 11, 2021; 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, 2020, 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. Forward-looking statements involve known and unknown risks and uncertainties, some of which are beyond the company’s control. Management’s expectations for the company’s future necessarily involve a number of assumptions, judgments and estimates, and various factors could cause actual results to differ materially from the expectations expressed in these and other forward-looking statements. These assumptions, judgments, estimates and factors are discussed in the company’s Annual Report on Form 10-K for the year ended December 31, 2020, and its reports on Form 10-Q and Form 8-K, which are available on the Investor Relations page of the company’s Web site at www.FreddieMac.com/investors and the SEC’s website at www.sec.gov. The company undertakes no obligation to update forward-looking statements it makes to reflect events or circumstances occurring after the date of this press release.

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 undertakes no obligation, and disclaims any duty, to update any of the information in those documents.

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: Fred Solomon
703-903-3861
Frederick_Solomon@freddiemac.com

 

FAQ

What is the total amount of Freddie Mac's second SCRT offering in 2021?

The total amount is approximately $1.0 billion.

When is the expected settlement date for the SCRT transaction?

The transaction is expected to settle on June 15, 2021.

What percentage of loans in the SCRT offering are on a forbearance plan?

Only 0.38% of the loans are on a forbearance plan.

How much of the SCRT offering consists of guaranteed senior certificates?

The offering includes approximately $936 million in guaranteed senior certificates.

What types of loans back the SCRT offerings?

The offerings are backed by seasoned re-performing loans (RPLs).