Freddie Mac announced the pricing of its third “Freddie Mac Whole Loan Securities (WLS)”, which totaled to roughly $348 million of guaranteed senior and non-guaranteed subordinate actual loss securities.
The purpose of WLS is to shift some of its credit risk from the underlying super-conforming mortgages to subordinate investors, and is an additional offering in Freddie Mac's single-family credit risk transfer program. WLS includes many of the same features from Freddie Mac Gold PC's while leveraging traditional private label characteristics and the company has issued nearly $1.3 billion in WLS to date.
"We are pleased to bring our third WLS transaction to market and have seen strong investor interest," said Kevin Palmer, senior vice president of Freddie Mac Credit Risk Transfer. "We expect to be a regular issuer of WLS going forward."
Freddie Mac Whole Loan Securities Trust, Series 2016-SC01, a Freddie Mac trust, has plans of issuing about $327 million in guaranteed senior certificates and about $21 million in unguaranteed subordinate certificates. Additionally, the collateral behind the certificates are 661 fixed-rate super conforming loans. The report shows Bank of America Merrill Lynch and Barclays as co-lead managers and joint bookrunners and says WLS 2016-SC01 is expected to settle later this month.
This is not the first time Freddie Mac has introduced new risk-sharing initiatives. Other such initiatives include STACR, Whole Loan Securities and ACIS. Freddie Mac also states in the report that they were the first agency to market these types of credit risk transfer transactions. Beginning in 2013, the company has transferred a substantial portion of credit risk on over $500 billion of UPB on single-family mortgages.