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Freddie Mac Announces Pricing of $285 Million Multifamily Small Balance Loan Securitization

MCLEAN, VA, Jul 21, 2017 (Marketwired via COMTEX) — MCLEAN, VA–(Marketwired – Jul 21, 2017) – Freddie Mac (otcqb:FMCC) announces the pricing of the SB35 offering, a multifamily mortgage-backed securitization backed by small balance loans underwritten by Freddie Mac and issued by a third-party trust. The company expects to guarantee approximately $285 million in Multifamily SB Certificates (SB35 Certificates), which are anticipated to settle on or about July 28, 2017. Freddie Mac Small Balance Loans generally range from $1 million to $6 million and are backed by properties with five or more units. This is the tenth SB Certificate transaction in 2017.

SB35 Pricing

Class   Principal/   Weighted Average Life (Years)   Spread (bps)   Coupon   Yield   Dollar Price Notional Amount (mm) A-5F   $7.126   4.13   S + 28   2.2500%   2.1016%   $100.4697 A-5H   $107.171   4.10   S + 47   2.4400%   2.2895%   $100.4659 A-7F   $16.111   5.60   S + 54   2.6000%   2.4861%   $100.4828 A-7H   $18.535   5.37   S + 70   2.7500%   2.6287%   $100.4898 A-10F   $116.087   7.32   S + 77   2.9300%   2.8429%   $100.4777 A-10H   $20.238   7.47   S + 96   3.1300%   3.0418%   $100.4948 X1   $316.965   5.82   Non-Offered               

Details

Sole lead manager and bookrunner: J.P. Morgan Securities LLC

Co-managers: Drexel Hamilton, LLC, FTN Financial Capital Markets, Stifel, Nicolaus Company, Incorporated, and Wells Fargo Securities, LLC

114 mortgages originated by CBRE Capital Markets, Inc., Greystone Servicing Corporation, Inc., and Sabal TL1, LLC, through its affiliate Sabal Capital II, LLC

SB35 Certificates Offering Circular

Small Balance Securitization Investor Presentation

Freddie Mac is guaranteeing six senior principal and interest classes and an interest only class of securities issued by the FRESB 2017-SB35 Mortgage Trust and is also acting as mortgage loan seller and master servicer to the trust. In addition to the seven classes of securities guaranteed by Freddie Mac, the trust will issue certificates consisting of Class B and R Certificates, which will not be guaranteed by Freddie Mac and will be sold to private investors.

The Small Balance Loan (SBL) origination initiative was first announced in October 2014, and expands the company’s continuing effort to better serve less populated markets and provide additional liquidity to smaller apartment properties. Freddie Mac has a specialty network of Seller/Servicers and SBL lenders with extensive experience in this market who source loans across the country.

This announcement is not an offer to sell any securities of Freddie Mac or any other issuer. 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 for the year ended December 31, 2016, filed with the Securities and Exchange Commission (SEC) on February 16, 2017; all other reports Freddie Mac filed with the SEC pursuant to Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) since December 31, 2016, excluding any information “furnished” to the SEC on Form 8-K; and all documents that Freddie Mac files with the SEC pursuant to Sections 13(a), 13(c) or 14 of the Exchange Act, excluding any information furnished to the SEC on Form 8-K.

Freddie Mac’s press releases sometimes contain forward-looking statements. A description of factors that could cause actual results to differ materially from the expectations expressed in these and other forward-looking statements can be found in the company’s Annual Report on Form 10-K for the year ended December 31, 2016, and its reports on Form 10-Q and Form 8-K, filed with the SEC and available on the Investor Relations page of the company’s Web site at www.FreddieMac.com/investors and the SEC’s Web site at www.sec.gov.

Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we’ve made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders, and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.

MEDIA CONTACT: Christopher Spina 703-388-7031 Christopher_Spina@FreddieMac.com INVESTOR CONTACT: Robert Koontz 571-382-4082 Aaron Dunn 571-382-5818

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Freddie Mac enters rental market to increase affordability | 2017-07 …

Freddie Mac announced it is gearing up to enter the rental market, however unlike Fannie Mae’s approach, Freddie will focus on affordable housing.

Earlier this year, Fannie Mae upped its game in the multifamily sector with its agreement to backstop up to $1 billion in debt for Invitation Homes, the largest owner of single-family rental homes in the U.S.

Freddie Mac explained its goal is to provide tens of millions of dollars in financing to midsized landlords or even nonprofits, according to an article by Matthew Goldstein for The New York Times. The GSE could provide up to $1 billion in financing or loan guarantees to smaller firms with affordable housing rentals.

From the article:

“It is, first and foremost, affordable,” said the official, David D. Leopold, a Freddie Mac vice president for targeted affordable sales and investments. “The size of the sponsor is less important than affordability.”

Freddie Mac is still hashing out many of the details of the plan, but Mr. Leopold said the company hoped to announce the first deal within 90 days.

The Federal Housing Finance Agency approved of the plan on a trial basis, the article stated. Back in 2012, the agency fought against Freddie Mac’s plan to provide financing to buyers of foreclosed homes, saying it could encourage home flipping.

The article explains that while Freddie Mac’s plan is a response to the criticism to Fannie Mae’s approach, there is also another reason for its strategy.

From the article:

The strategy also stems from a growing consensus among housing policy makers and landlords that both Freddie Mac and Fannie Mae should play roles in providing financing to single-family home operators. The market has grown since the collapse of housing prices a decade ago touched off the worst financial crisis since the Great Depression and led to more than six million completed foreclosures.

Realtors withdraw objection to key flood insurance legislation

Realtors withdraw objection to key flood insurance legislation
The National Association of Realtors said that there have been significant improvements in key flood legislation that will allow the industry group to endorse it.

Among the improvements to the 21st Century Flood Reform Act is the House Financial Services commitment to retain the current flood insurance provisions’ “grandfathering” policy, which protects homeowners from significant rate increases when a flood map changes.

The most recent version of the bill will also limit fee increases and rate hikes that would have affected policyholders under earlier versions, according to the NAR.

Celebrate excellence in insurance. Nominate a worthy colleague for the Insurance Business Awards.

“House Financial Services Committee Chairman Jeb Hensarling (R-Texas), as well as Subcommittee on Housing and Insurance Chairman Sean Duffy (R-Wis.), deserve high praise for working with realtors to improve this legislation,” NAR President William E. Brown said in a statement.

“The changes to the 21st Century Flood Reform Act will help give certainty to homeowners who have brought their property to code and have done their part to protect it against flood risk. It’s a fair and reasonable approach that recognizes the need for accessible, affordable flood insurance, while taking us one step closer towards reauthorization.”


Related stories:
Bipartisan group proposes flood premium cap
Senators introduce NFIP reauthorization bill

With Expiration Looming, NAR, NAHB Applaud Flood Insurance …

It remains to be seen if it passes into law, or how it
will hold up during the process, but housing industry groups say an agreement
has been hammered out for renewing the federal flood insurance program. Both
the National Association of Home Builders (NAHB) and the National Association
of Realtors® (NAR) say they have been working with the House Financial Services
Committee on parameters, for, in the words of NAHB, “A viable, long-term flood
insurance reauthorization bill that will keep the National Flood Insurance Program
(NFIP) fiscally sound and enable home builders to provide safe and affordable
housing to consumers.”

A flood insurance policy is required of homeowners who
live in certain Federal Emergency Management Agency (FEMA) designated flood
plains and have a mortgage issued by any federally charted financial
institution
. The program
provides $1.25 trillion in coverage for about 5 million policyholders
nationwide. Policies are issued by private insurers but are backed
by FEMA. Because not all homeowners are required to carry the insurance, risk
is not shared over various levels of risk. 
NFIP was authorized by an act of Congress in 1968 and has been
reauthorized periodically since then.  

The current reauthorization would be
through the “21st Century Flood Reform Act.”  NAR said changes to the legislation have
cleared the way
for their endorsement of the bill.

The Chicago Tribute, after the
recent flooding in Illinois, reported that the federal program is indebted to
the U.S. Treasury for $24.6 billion after massive payouts for damages caused by
Hurricane Katrina, Superstorm Sandy, and other recent and devastating floods. NFIP
is paying $400 million in interest on that debt.

Flood insurance premiums do not
reflect the true cost of the program and policies are not only backed by FEMA,
they are federally subsidized. The last reauthorization of the program in 2012,
the Biggert-Waters Flood Insurance Reform Act, required NFIP to raise premium rates
to reflect true risk.

While Biggert-Waters grandfathered existing
policies, albeit with a gradual reduction of those subsidies, new policies were
issued at a full risk-based rate. This caused immediate disruption in coastal
and other flood-prone areas.  In 2013,
MND wrote about one homeowner, in Pinellas County, Florida,
who purchased a future retirement home in 2012 and paid a $3,300 premium for
his first year of coverage.  When he
received his next bill, it was for $24,300. 
Congress quickly rolled back the risk-based premium requirement, but it
continues to hang over the real estate market in lower elevation areas.

Among the Financial Services
Committee’s proposed changes that are supported by the housing groups are:

  • Elimination of a provision that
    would have ended NFIP coverage of new homes constructed in the 100-year
    floodplain;
  • Ensuring that “grandfathering” will
    remain for all policyholders if their risk changes when FEMA periodically
    revises its flood plain mapping.
  • Raises the annual premium floor for
    rate increases from its current 5 percent level to 6.5 percent rather than the
    8 percent originally proposed.

The changes laid out in press
releases from NAHB and NAR do not appear to address the problem of premium
increases
when properties change hands. There are anecdotal reports that uncertainty
over this issue is already impacting real estate sales in some coastal areas.

NAHB Chairman Grant MacDonald said, “NAHB
commends House Financial Services Chairman Jeb Hensarling and Housing
Subcommittee Chair Sean Duffy for their leadership in working with us to
produce a bill that will preserve rate affordability, shore up the NFIP and
address the concerns of the housing community. With the NFIP set to expire on Sept. 30, we urge the House to pass this bill quickly.”

NAR President William E. Brown, said,
“This legislation protects taxpayers, as well as homeowners, which is no
easy task. The September 30 reauthorization deadline still looms in front of
us, and Realtors® are eager to see this legislation progress
quickly. Leaders on both sides of the aisle are well aware that this issue
touches 22,000 communities – in every state, both coastal and inland. We’re
grateful for the committee’s support and look forward to their continued
efforts on behalf of homeowners.”

Amid U.S. real estate buying binge by foreign investors, Florida …

Foreign investment in U.S. residential real estate recently skyrocketed to a new high with nearly half of all foreign sales happening in Florida, California and Texas.

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This year’s National Association of Realtors survey of international investing in U.S. real estate once again revealed that foreign buying is focused first and foremost on Florida, where 22 percent of such activities took place. The Sunshine State was followed by California and Texas (each at 12 percent), and then by New Jersey and Arizona (four percent apiece).

Florida was the most popular state for Canadian buyers, fueled by a sharp increase in sales dollar volume. Chinese buyers mostly chose California, while Texas was the preferred state for Mexican buyers.

Overall, 284,455 U.S. properties were bought by foreign buyers, up 32 percent from 2016. Purchases accounted for 10 percent of the dollar volume of existing-home sales, up from 8 percent last year.

NAR’s study found that between April 2016 and March 2017, foreign buyers and recent immigrants purchased $153 billion of residential property. That’s a 49 percent jump from $103 billion in 2016 and surpasses the $103.9 billion in purchases in 2015 as the new survey high.

“The political and economic uncertainty both here and abroad did not deter foreigners from exponentially ramping up their purchases of U.S. property over the past year,” NAR chief economist Lawrence Yun stated.

“While the strengthening of the U.S. dollar in relation to other currencies and steadfast home-price growth made buying a home more expensive in many areas, foreigners increasingly acted on their beliefs that the U.S. is a safe and secure place to live, work and invest.”

Yun attributed the rise in Canadian purchasing property in U.S. markets that remain more affordable than in their own country.

“Inventory shortages continue to drive up U.S. home values, but prices in five countries, including Canada, experienced even quicker appreciation,” said Yun.

Foreign buyers typically paid $302,290, which was a 9.0 percent increase from the median sales price in the 2016 survey ($277,380) and above the sales price of all existing homes sold during the same period ($235,792).

About 10 percent of foreign buyers paid over $1 million, and 44 percent of transactions were all-cash purchases, down from 50 percent in 2016.