Freddie Mac has announced the settlement of the third Seasoned Loans Structured Transaction Trust (SLST) offering of 2019—a securitization of approximately $1.3 billion including both guaranteed senior and non-guaranteed subordinate securities backed by a pool of seasoned re-performing loans (RPLs).
Freddie Mac SLST Series 2019-3 includes approximately $1.069 billion in guaranteed senior certificates and approximately $257 million in non-guaranteed subordinate certificates. The right to purchase the subordinate certificates was awarded in September to New York Mortgage Trust Inc.
The underlying collateral backing the certificates consists of 8,121 fixed- and step-rate modified seasoned re-performing and moderately delinquent loans. These loans were modified to assist borrowers who were at risk of foreclosure to help them keep their homes.
The loans will be serviced by Select Portfolio Servicing, Inc. in accordance with requirements that prioritize borrower retention options in the event of a default and promote neighborhood stability.
Advisors to Freddie Mac on this transaction are BofA Securities, Inc. and Nomura Securities International, Inc., as co-lead managers and joint bookrunners, and Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Mischler Financial Group, Inc. (a minority-owned broker dealer certified as a Service-Disabled Veteran Business Enterprise) and Wells Fargo Securities, LLC as the co-managers.
To date, Freddie Mac has sold over $8 billion of non-performing loans (NPLs) and securitized more than $60 billion of RPLs consisting of $29 billion in fully guaranteed PCs, $25 billion in Seasoned Credit Risk Transfer senior/sub securitizations, and $7 billion in SLST transactions.
Freddie Mac’s last NPL transaction sold 87 NPLs serviced by Specialized Loan Servicing LLC to VRMTG ACQ, LLC, a minority and woman-owned business. The sold pool included $22.0 million in UPB and an average loan balance of $253,100.
Given the delinquency status of the loans, the borrowers have likely been previously evaluated for or are already in various stages of loss mitigation, including modification or other alternatives to foreclosure, or are in foreclosure. Mortgages that were previously modified and subsequently became delinquent comprise approximately 69% of the pool balance.