Freddie Mac Expands Green Bond Program


Freddie Mac has released its Single-Family Green Bond Framework under its Single-Family Green Bond Program, supporting the company’s commitment to promote environmentally sustainable single-family housing to help reduce climate-related risks and increase affordability.

The framework recently received a Light Green Second Opinion rating from CICERO Shades of Green. CICERO provides second opinions on institutions’ frameworks and independent reviews of green bonds.

“Freddie Mac’s sustainability strategy strengthens our commitment to our mission, helps us drive long-term stakeholder value and makes a difference in communities nationwide,” says Mark Hanson, senior vice president of securitization for Freddie Mac. “Through our Single-Family Green MBS, we’re financing energy-efficient homes and home improvements to help more families achieve and maintain affordable homeownership while reducing the housing sector’s environmental impact.”

Freddie Mac has issued more than $600 million in Single-Family Green MBS since the first bond was issued in April 2021. Each Single-Family Green MBS issued to-date is backed by Freddie Mac GreenCHOICE Mortgages, where borrowers used refinance proceeds to finance energy efficient home improvements. Specifically, a portion of the proceeds from each refinanced mortgage backing these Single-Family Green MBS paid off existing debt that was used to finance the purchase and installation of solar panels as a renewable energy source. Currently, Freddie Mac reviews appraisal reports to confirm the presence of solar panels on properties securing each mortgage included in our Single-Family Green MBS issuances.

Freddie Mac’s Single-Family Green Bond Framework broadens the criteria of eligible mortgages available for securitization into Single-Family Green MBS. Mortgages backed by newly constructed homes with a renewable energy source and mortgages backed by newly constructed homes with a Home Energy Rating System Index Score of 60 or less, now meet Freddie Mac’s requirements for the Single-Family Green MBS program. This expansion of eligible energy efficient mortgages will help encourage green construction and energy efficiency home improvements. The company plans to issue Single-Family Green MBS with additional eligible collateral, as defined by the Framework, in the coming months.

In addition to the Single-Family Green Bond program, Freddie Mac has issued $4.56 billion of Multifamily Green Bonds to date, backed by Green Up and Green Up Plus loans. The loans are designed to support water and/or energy efficiency improvements in workforce housing, helping the environment while lowering monthly expenses for tenants and borrowers. Freddie Mac’s 2020 Impact Bonds Report further explains the impacts of the Multifamily Green Bonds. Multifamily Green Bonds received a Light Green Second Opinion from CICERO Shades of Green and are issued in accordance with the Freddie Mac Multifamily Green Bonds Framework. The framework is aligned with the four core components of the International Capital Market Association’s Green Bond Principles.

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