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United States : Freddie Mac Completes Second RPL Structured Sale of SLST Program.

Freddie Mac today announced its second Freddie Mac Seasoned Loan Structured Transaction (SLST) -- via an auction of 1,262 seasoned re-performing loans (RPL) and moderately delinquent loans serviced by Select Portfolio Servicing, Inc. The transaction is expected to settle in July 2017. Freddie Mac, through its advisors, began marketing the transaction to potential bidders on May 17, 2017.

The SLST securitization program is a key part of Freddie Mac's seasoned loan offerings initiatives, which are designed to reduce less liquid assets in its mortgage-related investments portfolio and shed credit and market risk via economically reasonable transactions. The servicing of the loans will be in accordance with RPL requirements pdf , similar to FHFA's requirements pdf applicable to the sale of nonperforming loans (NPLs), which prioritize borrower retention options in the event of a default and promote neighborhood stability.

The transaction is a two-step structured sale of seasoned loans. The initial step involves the sale of loans via a competitive bidding process, subject to a securitization term sheet. In the second step, the purchaser of the loans will securitize the loans. Freddie Mac will guarantee and purchase the senior tranche of the securitization. The first loss subordinate tranche will be initially retained by the loan purchaser. A key requirement of this transaction is that the buyer of the loans, and therefore the subordinate tranche, be an investor with substantial experience in managing both performing and moderately delinquent mortgage loans as well as securitizing mortgage loans.

The collateral is comprised of fixed- and step-rate modified seasoned loans. These loans were modified to assist borrowers who were at risk of foreclosure to help them keep their homes. The aggregate pool is geographically diverse and has a loan-to-value ratio of approximately 101 percent, based on Broker Price Opinions (BPOs).

Advisors to Freddie Mac on this transaction are Wells Fargo Securities, LLC, Credit Suisse Securities (USA) LLC, and CastleOak Securities, L.P., a minority-owned business.

To date, Freddie Mac has sold $7 billion in nonperforming loans (NPLs), securitized $26 billion in RPLs, and transacted $2 billion in structured offerings of seasoned loans.

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Publication:Mena Report
Date:Jun 22, 2017
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