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Securitization

June 6, 2019 By Janover Ventures

Securitization in Relation to the Freddie Mac SBL Program

In the process of securitization, loans are pooled together and sold to investors. Many types of commercial and multifamily loans, including HUD/FHA multifamily loans, Freddie Mac and Fannie Mae multifamily loans, and CMBS loans are securitized. Securitization significantly increases the amount of money available for borrowers, as lenders can make a loan, sell it for securitization, and can use the proceeds to make another loan, beginning the process all over again.

In the case of Freddie Mac Multifamily securitizations, lenders sell the loans directly to Freddie Mac, which will place the loans in a third-party trust, after which they will be sold as bonds on the secondary market. Most classes of Freddie Mac bonds are guaranteed by Freddie Mac, though certain subordinate and mezzanine bonds are not. Unlike U.S. Treasury bonds, Freddie Mac bonds are not explicitly backed by the full faith and credit of the U.S. government, however, they are implicitly government-guaranteed, as most investors believe Freddie Mac would receive a bailout were it to struggle financially (as it did in 2008). In regards to the Freddie Mac SBL program, all (or nearly all) loans are securitized. For borrowers, this means that their Optigo Small Balance Loans will sometimes not be serviced by their original lender, though this is not always the case.

Filed Under: Freddie Mac SBL, Freddie Small Balance Loans, Glossary Tagged With: Freddie Mac Apartment Loans, Freddie Mac Multifamily, Freddie Mac Multifamily Loans, Freddie Mac Optigo, Freddie Mac SBL, Freddie Mac Small Balance Loans

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Janover Ventures, LLC.
7601 N Federal Hwy. Ste B140
Boca Raton Florida 33487

Call: (800) 567-9631
Email: hello@multifamily.loans

 

Information

Loan Facts

Terms, Qualifications, and Guidelines

Term Sheet

Interest Rates

Portfolio Loans

 

Knowledge Base

Frequently Asked Questions

Glossary

Application

Application Process

Third Party Reports

Appraisal Process

Environmental Assessments

Property Condition Reports