Opening of Ace Hardwood Store. Loan provided by Commercial Loan Direct.
Written by Leane Eicoff| September 29, 2018
Freddie Mac Apartment Loans
The Federal Home Loan Mortgage Corporation ("Freddie Mac" or FHLMC) has multifamily mortgage products available for conventional ("market-rate") properties, seniors housing, student housing, cooperative and targeted affordable housing. Through it"s various programs, Freddie Mac offers mortgages to experienced multifamily investors that focus on low- to median-income tenants. Like CMBS and Fannie Mae loans, these mortgages are pooled, securitized, and sold to investors.
Freddie Mac loans are priced based on the corresponding treasury and a spread, which takes into account the loan amount, term, LTV, and property location. Pricing considerations the borrower should be aware of are the following:
Freddie Mac securitizes its loans into bonds through what it calls a "K-deal" structure. Mortgage loans are underwritten, priced, and structured through Freddie"s Capital Markets Execution (CME) product, then are pooled and sold as commercial mortgage-backed securities. The securitized pool includes senior bonds guaranteed by Freddie Mac and subordinate bonds that are held by private investors who bear the risk of initial losses (i.e. are in the "first-loss position"). The senior bonds guaranteed by Freddie carry the equivalent of a AAA rating based on the quality of the underlying collateral. The unguaranteed mezzanine and subordinate bonds (about 15% of all of the bonds) sold to the private capital investors accounts for the majority of the risk. Each K-Deal represents about $1.2 billion in multifamily mortgage loans.
Typically serviced by the originator/underwriter, but may be transferred to third parties.
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