After projecting a strong year for the multifamily market, government sponsored enterprise, Federal Home Loan Mortgage Corp (OTCBB:FMCC) announced the offering of another Structured Pass-Through K Certificates. These certificates are multifamily mortgage-backed securities that are owned by a single sponsor, Kayne Anderson Real Estate Advisors, LLC. The enterprise expects these K certificates to price in the week starting March 2, 2015 and will settle around March 18, 2015.
Issue of K Certificates for the fourth time
Federal Home Loan Mortgage Corp (OTCBB:FMCC) provided details that the K-KA Certificates originated from 17 recently multifamily mortgages. The Certificates will be offered by co-lead managers namely, Credit Suisse Securities (USA) LLC and Wells Fargo Securities, LLC, while Morgan Stanley & Co. LLC and Stern Brothers & Co. will be the co-managers for the offering.
These Certificates, which are fourth such offering this year will be guaranteed by Federal Home Loan Mortgage Corp (OTCBB:FMCC). The enterprise said that these Certificates will not be rates and will include two classes, that is, interest only and senior principal and interest only class. Also, the K-KA Trust will further issue Class B and Class R Certificates, which will be subordinate to the classes that are backed by K-KA but will not be guaranteed by Freddie Mac.
Such form of K-deal Certificates is an endeavor by Federal Home Loan Mortgage Corp (OTCBB:FMCC) to shift a portion of the risk from taxpayers to private investors, who buy unguaranteed subordinate class certificates. Earlier, Freddie Mac had projected a strong year for the multifamily market, projecting a higher multifamily supply that will exceed the pre-recession levels.
In yet another development, regulator Federal Housing Finance Agency (FHFA) has tightened the rules for investors buying the enterprise’s nonperforming loans. The new rules mandate investors to be lenient on home borrowers and should limit foreclosure. The shares of Freddie Mac were down by over 3% to $2.82 in the last trading session.