Freddie Mac has priced its fourth Seasoned Credit Risk Transfer Trust (SCRT) offering of 2018; a rated securitization of approximately $1.95 billion of both guaranteed senior and unguaranteed subordinate securities.
Specifically, the offering includes approximately $1.80 billion in guaranteed senior certificates and approximately $151 million in unguaranteed mezzanine and subordinate certificates.
The issuance is expected to settle on November 15. The collateral backing the certificates consists of 9,782 fixed- and step-rate modified seasoned re-performing loans (RPLs).
These loans were modified to assist borrowers who were at risk of foreclosure to help them keep their homes and will have been performing for at least 12 months as of the issuance of the certificates.
The loans are serviced by Select Portfolio Servicing Inc. The servicing of the loans will be in accordance with requirements that prioritize borrower retention options in the event of a default and promote neighborhood stability.
Wells Fargo Securities and J.P Morgan Securities are co-lead managers and joint bookrunners.
Citigroup Global Markets Inc., Mischler Financial Group, Inc., a minority broker dealer certified as a service-disabled veteran business enterprise and Nomura Securities International, Inc. are the co-managers.
The SCRT securitization program is a key part of Freddie Mac’s seasoned loan offerings to reduce less liquid assets in its mortgage-related investments portfolio and shed credit and market risk via economically reasonable transactions.
To date, Freddie Mac has completed sales of $7 billion of non-performing loans and settled $45 billion of RPLs consisting of $29 billion via fully guaranteed PCs, $14 billion via SCRT senior/sub securitizations, and $2 billion via Seasoned Loan Structured Transaction (SLST) offerings.