Latest Freddie risk-transfer offering features $983m in RPLs

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Freddie Mac this week announced it is planning its next structured sale of approximately $983 million from its investment pool of formerly troubled loans.

The loan sale will be through Freddie's Seasoned Loan Structured Transaction (SLST) program, one of multiple GSE risk-transfer programs off-setting taxpayer exposure through the private securitization market.

The sale will involve seasoned re-performing loans, intended for purchase by servicers and firms experienced in managing and securitizing formerly troubled loans, and able to retain a first-loss subordinate tranche of issued securities.

It would be the third such deal under its SLST program that involves RPLs. Freddie’s previous transaction, which closed in July, also included “moderately” delinquent loans.

Loan buyers will be required to follow Federal Housing Finance Agency requirements on prioritizing borrower workouts (including modifications or partial loan forgiveness) in the event of a default, in order to limit foreclosures and emphasize neighborhood/housing market instability.

The assets will carry a Freddie Mac guarantee; the GSE will also acquire the guaranteed security issued through the eventual securitization vehicles, according to a Freddie release.

Freddie has sold off $31 billion in RPLs and $7 billion in NPLs in its mortgage-related investments since the launch of the program last year.

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