Freddie Mac is planning a securitization this month of reinstated loans that have been current for at least 12 consecutive months.
The deal is part of the company's plan to securitize certain previously delinquent mortgage loans as well as mortgages that Freddie Mac bought from its related Mortgage Participation Certificate (PC) pools that have been reinstated to current, performing status and have not been modified.
These reinstated loans, which Freddie Mac holds in its mortgage-related investment portfolio, will be pooled into new Freddie Mac PCs with the new "R" prefix. Reinstated loans must be current at least four consecutive months at the time of securitization into pools with the "R" prefix. These PCs may back new Freddie Mac REMIC and Giant securities in the future.
"This capability represents an important step in Freddie Mac's disposition strategy for its distressed asset portfolio," said Adama Kah, Freddie Mac vice president, distressed assets management. "These securitizations will achieve the key goals of developing liquidity, flexibility and scalability while conserving value for the taxpayer."
Freddie Mac has purchased a significant number of delinquent mortgage loans from PC pools and held those loans in the company's mortgage-related investment portfolio. Freddie Mac continues to pursue resolutions of the delinquencies while these loans are held in the portfolio.
"By securitizing mortgage loans that were delinquent but reinstated to performing status, Freddie Mac will provide additional needed liquidity to the market using our traditional mortgage security vehicles," said Mark Hanson, Freddie Mac vice president, securitization and cash execution. "This new avenue for securitization also will provide more flexibility for Freddie Mac to manage its mortgage-related investment portfolio."