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Freddie Mac Launches K-Certificate Series Backed by Workforce Housing

McLEAN, VA—The GSE has been stretching itself to support workforce and low-income housing through various initiatives.

By Erika Morphy | erikamorphy | | Updated on May 25, 2016
Freddie Mac headquarters Freddie Mac headquarters
McLEAN, VA—Freddie Mac  has launched a new series of K Certificates multifamily mortgage-backed securities called the K-W Series. They follow the K Certificates structure in that they are Structured Pass-Through Certificates backed by loans on multifamily properties. In the case of the K-W Series, the apartments in question are specifically designed to be affordable to low-to-middle-income households in a geographic location. Freddie Mac is issuing approximately $608 million in its first offering, which are expected to settle this week. The K-W01 Certificates are guaranteed by Freddie Mac with the loans originated through the company’s workforce housing loan initiative. “This K-Deal is important because it brings an additional private capital focus to support workforce housing, which accounts for only a fraction of new multifamily supply across the country,” said Robert Koontz, vice president of Multifamily Capital Markets. Last week the GSE debuted a new credit risk transfer offering that packages affordable housing mortgage loans to sell to private investors. It has just settled its first offering of $52 million of these notes, which the GSE is calling Multifamily Structured Credit Risk Debt, or SCR notes (pronounced as score). Here too, Freddie borrowed from its popular and standard multifamily mortgage-backed structure — the K Certificate — to create a new offering.  Indeed, the K Certificate is the foundation for almost all of its offerings. To give another example,  Freddie Mac recently priced a K-P Series offering, which are backed by seasoned multifamily mortgages from Freddie’s retained portfolio. In this case, the K-P offerings held 40 mortgages with Freddie issuing some $974 million in K Certificates last month.

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