Freddie Mac's reverse REMIC Giant PC securities program, which aims to improve liquidity for remaining real estate mortgage investment conduit securities, has gotten underway.
Freddie Mac mortgage funding executives say at least four of the new securities are scheduled for March settlement.
Under the program, which begins with March 30 REMIC settlements, the new securities permit a pro rata portion of all outstanding Freddie Mac REMIC security classes from a previously issued group to constitute, in aggregate, a pass through from the mortgage collateral backing the original group. That pass-through re-REMIC class then becomes the collateral for a new Freddie Mac Giant PC security that is eligible for all Freddie Mac resecuritization programs.
If the collateral backing the original REMIC met Securities Industry and Financial Markets Association (SIFMA) to be announced market good-delivery guidelines at origination, the new Giant Security also will meet those same good-delivery guidelines.
Freddie will issue 15-, 20- and 30-year reverse REMIC Giant PCs under the new prefixes Z4, Z5 and Z6, respectively. The reverse REMIC Giant PCs also can be used under existing 40-year, 10/20 initial interest fixed-rate, 100% relocation mortgages, reduced minimum servicing and prepayment penalty programs.
The Freddie executives said the catalyst for the move was a SIFMA ruling that the concept was in keeping with its guidelines early this year, an event that also spurred Fannie Mae to develop a similar program earlier. A call to a Fannie had not been returned at press time.