Freddie Mac · OTC:FMCC
Freddie Mac — Investor Presentation (March 2016)
17 slides from Freddie Mac's investor presentation, March 2016
Slide 1: Freddie Mac Multifamily Securitization Small Balance Loan (FRESB)
Freddie Mac Multifamily Securitization Small Balance Loan (FRESB) March 2016
Slide 2: Table of Contents
Table of Contents Freddie Mac Multifamily Business – Key Facts 2015 YTD Multifamily Review Small Balance Loan (SBL) Business Introduction SBL Property Characteristics SBL Terms Sourcing our SBL Business SBL Historical Performance SBL Mortgage Guidelines Expected Securitization Time
Slide 3: Multifamily Business – Key Facts
Multifamily Business – Key Facts Freddie Mac Multifamily helps to ensure an ample supply of affordable rental housing by purchasing mortgages secured by apartment buildings with five or more units. Freddie Mac buys loans from a network of approved Program Plus® Seller/Servicers and Targeted Affo
Slide 4: Multifamily Business – YTD 4Q 2015 Review
Multifamily Business – YTD 4Q 2015 Review Freddie Mac Multifamily funded $47.3 billion in new business volume We have securitized $35.6 billion of multifamily loans into K-Deals We financed approximately 650,000 apartment units in more than 3,500 properties. Our portfolio delinquency* rate w
Slide 5: SBL Business Introduction
SBL Business Introduction Freddie Mac Multifamily formally announced the addition of the SBL line of business to its lending platform in October, 2014 (see article here) Freddie Mac has approved a specialty network of eleven seller/servicers and SBL lenders with extensive experience in the SBL m
Slide 6: SBL Property Characteristics and Key Benefits
SBL Property Characteristics and Key Benefits Freddie Mac Multifamily generally refers to SBL as loans between $1M and $5M, though in the Commercial Real Estate world “small loans” can often refer to loans <$15M. Certain regulatory agencies refer to small loans as having 5-50 units. A typical mo
Slide 7: SBL Terms - Prepayment Provisions
SBL Terms - Prepayment Provisions Hybrid ARMs1 Fixed-Rate 5+15 Year 7+13 Year 10+10 Year 5 Year 7 Year 10 Year Option 1 54321, 1% 5544321, 1% 5544332211, 1% 54321 5544321 5544332211 Option 22 321(3), 1% 3(2)2(2)1(3), 1% 3(3)2(3)1(4), 1% 321(3) 3(2)2(2)1(3) 3(3)2(3)1(4) Option 33 YM, 1% YM, 1% YM, 1%
Slide 8: Sourcing Our SBL Business
Sourcing Our SBL Business The dedicated SBL Production group sources its loans from a select group of eleven experienced multifamily lenders The small size of the network promotes quality originations and a high level of service to lenders and borrowers. Lenders must meet our standards for both
Slide 9: SBL Historical Performance
SBL Historical Performance For historical context, the Freddie Mac Multifamily Research Group performed an in-depth study of the small loans in the context of the CMBS space. The following summarizes the findings of their research paper, located here. From 1995 through 2012, roughly one-third of
Slide 10: SBL Historical Performance (cont’d)
SBL Historical Performance (cont’d) Small balance loans typically have a fixed percentage stepdown structure, vs. yield maintenance and defeasance, which are more common in the GSE and CMBS space » A common small balance loan product is the Hybrid ARM, with an initial fixed rate period followed by
Slide 11: SBL Mortgage Guidelines
SBL Mortgage Guidelines The following are the general guidelines for our SBL product (subject to certain exceptions): Conventional multifamily housing with 5-50 residential units Section 8 vouchers, tax abatements, and cooperatives in the boroughs of New York and Long Island counties allowed P
Slide 12: SBL Mortgage Guidelines, (cont’d)
SBL Mortgage Guidelines, (cont’d) Effective gross income is calculated based on trailing 3-months actual rent collections or the annualized current rent roll minus a minimum 5% vacancy rate subject to submarket data and actual rent collections Expenses are generally calculated based on trailing
Slide 13: SBL Mortgage Guidelines, (cont’d)
SBL Mortgage Guidelines, (cont’d) Individuals who are US citizens Limited partnerships Limited Liability companies Single Asset Entities (SAE) Borrowers: Multiple Asset Entities (MAE) Special Purpose Entities (SPE) Tenancy-in-Common (TIC) Trusts (with warm body guarantor) Supplemen
Slide 14: SBL Market Credit Alignment
SBL Market Credit Alignment DCR/LTV Baseline Minimum Amortizing DCR Maximum LTV Top SBL Markets 1.20x 80% Standard SBL Markets 1.25x 80% Small SBL Markets 1.30x 70% for Cash Out Refi Very Small SBL Markets 1.40x 75% for Acquisition Full Term IO Adjustments* Full Term IO or IO during Fixed Rate Perio
Slide 15: SBL Securitization Timeline
SBL Securitization Timeline Small Balance Security Issuance Timeline Pool Full Due Marketing/ Closing/ Preparation Diligence Placement Settlement Surveillance >$100M 3-4 weeks 1 week 1-2 weeks Ongoing -Identified and -Perform accounting -Broker-Dealer -Prepare for -Serve as designate and legal due d
Slide 16: FRESB 2016-SBxx Transaction Structure
FRESB 2016-SBxx Transaction Structure Overview of Typical Deal Structure Structural Diagram Initial Principal or Weighted Class Notional Am ount Average Life Guaranteed Certificates: A5F $8,500,000 4.3 FRE- Investors A5H 139,500,000 4.2 Wrapped (including A7F 17,400,000 5.6 Classes Freddie A & X1 Ma
Slide 17: This product overview is not an offer to sell or a solicitation
This product overview is not an offer to sell or a solicitation of an offer to buy any Freddie Mac securities. Offers for any given security are made only through applicable offering circulars and related supplements, which incorporate Freddie Mac’s Annual Report on Form 10-K and certain other repor