In an effort to expand its support for affordable housing, Freddie Mac has announced a new series of credit risk transfer securities backed by tax-exempt loans (TELs) made by state or local housing agencies and secured by affordable rental housing.
“We are very proud to announce our first securitization backed by tax-exempt loans,” said Robert Koontz, vice president of multifamily capital markets. “Eight years after our first modern K-deal, Freddie Mac Multifamily continues to expand our securitization series and offload risk to private investors. Most importantly, we are bringing increased liquidity to the affordable housing market, a key focus that's at the heart of our mission.”
The company recently priced approximately $310.5 million in floating-rate ML Certificates that are supported by pools of fixed-rate TELs and taxable loans secured by completed, occupied, and stabilized affordable housing properties.
The inaugural issuance includes approximately $292 million in ML Certificates (Series ML-01) backed by TELs on 25 properties, and approximately $18.5 million in ML Certificates (Series ML-02) backed by taxable subordinate loans on three of the same properties. Both series of ML Certificates are expected to settle on or about June 29, 2017.
As Freddie Mac explains, ML Certificates are designed to create more liquidity for affordable multifamily housing while simultaneously protecting taxpayers from mortgage risk. The proceeds will be used to finance multifamily affordable housing projects.
“Our tax-exempt loan products help keep rental housing affordable for lower-income families and ensure cost-effective financing for tax-exempt multifamily properties,” said David Leopold, vice president for affordable housing production and investments at Freddie Mac Multifamily. “At a time when affordable housing levels are at a crisis point, this new security will bring additional investment to our tax-exempt loan products, which will allow us to finance even more affordable housing for families across this nation.”
Freddie Mac Multifamily has partnered with Multifamily Executive to explore the affordable housing crisis in the U.S. To read our coverage on the issue so far, click here.
