MReport February 2018

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62 | TH E M R EP O RT SECONDARY MARKET THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T Freddie Mac Expands Credit Risk Transfer Program This latest offering enables Freddie Mac to transfer mortgage credit risk simultaneously with the acquisition of loans. F reddie Mac recently announced the expansion of its Agency Credit Insurance Structure (ACIS) program with ACIS For- ward Risk Mitigation (AFRM), a front end credit risk transfer offering. This latest credit risk transfer (CRT) offering enables Freddie Mac to transfer mortgage credit risk simultaneously with the acquisition of loans by securing committed private capital and provid - ing stable pricing over a two-year horizon through the end of 2019. "AFRM is the first CRT product to secure private capital from investors committed to providing coverage on loans funded over the next two years and represents an important milestone in the expansion of the ACIS program," said Gina Subramonian Healy, VP of Credit Risk Transfer. "We'll continue to explore ways to evolve our front-end CRT offerings to transfer more credit risk away from taxpayers and provide investors new ways to invest in the U.S residential housing market." AFRM shifts a portion of the mortgage credit risk on pools of single-family loans with a combined unpaid principal balance of approximately $21 billion to a diverse panel of reinsurers, providing insurance coverage with a maximum limit of approximately $650 million, according to the release. This covered pool will consist of 30-year fixed-rate loans with loan to value ratios between 60 and 97 percent, with a similar structure as our core ACIS offering. Freddie Mac will continue to offer core ACIS insurance policies on a programmatic basis. Since the ACIS program's inception in 2013, Freddie Mac has placed nearly $9 billion in insurance coverage while expanding its investor base. Since 2013, the company has transferred a portion of credit risk on approximately $872 billion of UPB on single-family mortgages. The company has grown its investor base to more than 220 unique investors, including insurers and reinsurers. GSE Marks Single-Family Rental Milestone Berkadia announced the closing of the first affordable single- family rental financing through Freddie Mac last month. F reddie Mac officially entered the single-family rental space last month as Berkadia announced the closing of the very first affordable single-family rental financing through Freddie Mac Multifamily for TrueLane Homes, a leading owner of single-family rental homes. The financing totaled $11,092,000 for a 10-year, fixed-rate loan secured by 195 homes and a duplex. The homes were located in nine differ - ent metros and six different states. The financing also stands out due to the fact that all of the units are affordable for families earning at or below 100 percent of the median income. For families earning at or below 80 percent of the median income, that affordability percentage is still over 90 percent. Anthony Cinquini, Managing Director at Berkadia, said, "The single-family rental space has a gap in liquidity and affordability, which Freddie Mac is well-positioned to fill as evidenced by this transaction. We've been working closely with our partners at Freddie Mac to de - vise a lending platform that applies the discipline of our multifamily lending standards to single-family home rentals. This includes detailed and thorough underwriting of the borrowers and homes at origination and throughout the term of the loan, which promotes the long-term sustainability of the rental homes." The single-family rental market is poised for growth going for - ward, with a Harvard University study reporting that 53 percent of households earning less than $35,000 rent their housing, and that that number increases to over 60 percent for households earning less than $15,000. According to that same Harvard study, single- family homes now account for 39 percent of the nationwide rental stock. However, the continued lack of affordable housing on both the purchase and rental sides of the equation is creating opportu - nities for the savvy investor. David Leopold, VP Targeted Affordable Sales & Investments at Freddie Mac Multifamily, said, "We've said from the beginning that the goal of our single-family rental pilot is to increase the availability of affordable rental housing in com - munities across the country, and this transaction does exactly that. All of the homes in this transac- tion will remain affordable for working families, with over 90 percent affordable for low- and very-low income families." Berkadia was the first Freddie Mac seller or servicer to obtain the National Single Family Rental Designation from Freddie Mac Multifamily. The designation al - lows Berkadia to sell and service loans secured by single-family rental properties nationwide to Freddie Mac. This is the first such transaction. "We support the local communi - ty by investing capital to rehabili- tate affordable single-family rental homes in working-class markets," said Alan True, Founder and CEO of TrueLane Homes. "The deep knowledge of affordable housing at Freddie Mac and Berkadia and their mission to encourage borrow - ers like us to continue to provide housing to working-class individuals will impact the industry for years to come." Investors interested in the single-family rental market should take note of Five Star's 2018 Single-Family Rental Summit, set to unfold March 19-21, 2018, at the Renaissance Nashville Hotel in Nashville, Tennessee. The three-day Summit will feature top subject matter experts and skilled SFR practitioners leading discus - sion panels and training sessions related to property acquisition and management, financing, strate- gies for small, mid-cap, and large investors, and new developments related to technology and profes- sional services. You can find more information by clicking here.

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