The originator can partner with a B piece buyer to purchase the subordinate piece or sell these loans to the company. There is no restriction on how long these loans must remain on the originator's balance sheet.

For this inaugural transaction, Greystone Servicing Corp. originated the 44 mortgages backing the deal, SB1 Certificates.

Wells Fargo Securities is the sole lead manager and bookrunner.

There are some nine lenders active in the program, which launched in October 2014. Perhaps because of the size of the loans -- they are anywhere from $1 million to $5 million with an average balance of $2.5 million -- it took a while for an originator to amass $100 million loans. Once it hit that benchmark Freddie Mac took it to market. "Our exit strategy for this program always was securitization," Resnick says.

Because the loans are so small, demand for the securities is largely coming from buyers of residential securities. This is a huge market in which $100 million is the proverbial drop in the bucket and Freddie Mac does not anticipate competing demand. Also, the B piece market is robust enough to support purchases of the subordinate loans, Resnick believes.

As for Freddie Mac, the program's purpose is twofold: it gives the GSE reach into underserved multifamily markets, particularly rural areas that have little need for a, say, 500-unit apartment building. Small balance loans also assist in meeting affordable housing goals. "Small balance loans do tend to have a higher percentage of affordable housing deals in them," Resnick says.