David Brickman, senior vice president of the Freddie Mac’s multifamily business, recently provided a mid-year progress report detailing just how the company provides value for American taxpayers. The following are some of the highlights from the report, which came out in early September:
Multifamily earnings increased in the first half of 2012 to $942 million, almost as much as all of 2010.
Freddie financed rental housing for 193,000 families, most of which were affordable for families below local area median income.
Multifamily loan purchases for the first half of 2012 were at $12.4 billion, allowing borrowers to refinance at lower rates and fund new apartment construction.
But perhaps the most noteworthy takeaway in the report card is the increase in multifamily K-certificates being issued by the company. For the first half of 2012, Freddie Mac has settled $10 billion in mortgage-backed securities, an execution that transfers the risk to private investors, thereby protecting taxpayers. Since 2010, the company has settled K deals worth $30 billion.
And the company is getting creative: Freddie Mac recently announced its first offering of K Certificates backed exclusively by floating rate multifamily mortgages.
The company also recently announced the launch of another new type of K Certificate: the K-P-certificate.
This new type of Structured Pass-Through Certificate is made up of loans already existing within its multifamily portfolio, as wrapped funds. The first of these K-P deals, backed by 28 seasoned mortgages, is a $450 million transaction set for October. And the firm will act as special servicer for the first time in the K series of offerings. These loans don’t rely on newly originated collateral, and provide Freddie with a credit risk it is quite comfortable with.
According to Mitch Resnick, vice president for Freddie Mac Multifamily, this new offering is just a supplemental transaction that the company is trying out and it is not anticipating doing high volumes of the certificate in the future.