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FREDDIE MAC OFFERS $538 MILLION IN K CERTIFICATES

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MCLEAN, VA. — Freddie Mac has issued a new offering of structured pass-through certificates (K Certificates) worth approximately $538 million. This particular offering of multifamily mortgage-backed securities are backed by 19 multifamily properties owned by Apartment Investment & Management Company (NYSE: AIV) affiliates. The K-AIV Certificates are expected to price this week and settle on or about June 9, 2011.

This K deal is particularly unique because it is the first K Certificate backed by multiple loans from a single borrower. The first single loan K Certificate from a single borrower was the March 2010 K-SCT transaction, backed by the Starrett City property in Brooklyn, New York City.

“We expect to periodically issue these types of deals and others with loans from a single property and/or single borrower,” said David Brickman, national head of Multifamily and CMBS Capital Markets for Freddie Mac, in a statement. “It's the continuing evolution of K deals, which include loans on conventional, student, senior and targeted affordable multifamily properties.”

Multifamily K Certificates are structured pass-through securities backed by multifamily mortgage loans. K Certificates provide Freddie Mac with an efficient vehicle to securitize multifamily loans, subsequently providing investors with structured guaranteed securities that have both structured credit enhancement and the Freddie Mac guarantee.

The K-AIV Certificates will be offered to the market by a syndicate of dealers led by Bank of America Merrill Lynch and J.P. Morgan Securities LLC as co-lead managers and joint bookrunners for the transaction. Barclays Capital Inc. and Jefferies & Company, Inc. have been named co-managers for the transaction. The 19 recently originated multifamily mortgages in the K-AIV offering are guaranteed by Freddie Mac.

Freddie Mac has brought to market six K deals this year, including K-AIV, with an issuance size of approximately $1 billion each.

Freddie Mac was unavailable for additional comments on this particular offering.

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In addition, Freddie Mac released on Wednesday its monthly volume summary. A .pdf of the full summary can be found here.

Some of the highlights from April 2011 include:

  • The total mortgage portfolio decreased at an annualized rate of 3.2 percent in April.
  • Single-family refinance-loan purchase and guarantee volume was $16.6 billion in April, reflecting 70 percent of total mortgage purchases and issuances.
  • Total number of loan modifications were 11,349 in April 2011 and 46,507 for the four months ended April 30, 2011.
  • The aggregate unpaid principal balance (UPB) of Freddie Mac’s mortgage-related investments portfolio decreased by approximately $5.3 billion in April.
  • Freddie Mac mortgage-related securities and other guarantee commitments decreased at an annualized rate of 2.6 percent in April.
  • Single-family seriously delinquent rate decreased to 3.57 percent in April, while multifamily delinquency rate increased to 0.40 percent in April.
  • The measure of Freddie Mac’s exposure to changes in portfolio market value averaged $386 million in April.

— Dan Marcec

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