Modified home loans that are owned outright by the Federal Home Loan Mortgage Corp. are now being securitized. Excluded are loans modified through the Making Home Affordable initiative.
Freddie Mac announced Thursday that it has started securitizing some modified mortgages that are held in its mortgage-related investment portfolio.
Most of the loans that are being included in the new securities were acquired by Freddie from it participation certificates when they became at least 120 days past due.
The secondary lender noted that its practice is to move delinquent loans from participation certificates to its investment portfolio while the delinquency is being resolved.
Freddie’s investment portfolio stood at $534 billion as of March 31.
Freddie started securitizing previously delinquent, re-performing loans that hadn’t been modified in November 2011.
Only loans that have been current for at least six months are being included in the new participation certificates. The “modified PCs” have prefixes of “MA-MD.”
“Securitizing loans that have been modified and are now performing will allow Freddie Mac to better manage its mortgage-related investments portfolio,” Freddie Mac Vice President of Distressed Assets Management Adama Kah said in today’s statement. “We are taking another important step that creates liquidity and taxpayer value for these modified loans through PC securitization. Freddie Mac’s goal is to help families stay in their homes and provide alternatives to foreclosure.”
The McLean, Va.-based company said that loans modified through the Home Affordable Modification Program are excluded from the securitizations.
The securities are not to-be-announced deliverable, but they are eligible collateral for new Freddie giant PC securities.
Additional pool-level and loan-level disclosures specific to the modified PCs will include loan attributes at origination before modification, at the time of modification and at the time of securitization as modified PCs.
Descriptions of the new pool-level disclosures are online at www.freddiemac.com/mbs/html/cs_terms.
Loan-level variables are posted online at www.FreddieMac.com/mbs/docs/fs_lld.pdf.
