Freddie Mac is looking to help provide more enhanced liquidity in the single-family rental market.
In order to do so, it is launching a pilot program along with CoreVest as a partner.
CoreVest is approved under the pilot program which is expected to expand financing options for investors in SFR rentals for workforce and affordable housing. To be sure, the collateral in the following transaction is CoreVest’s – Freddie Mac is guaranteeing the Class A bonds.
CoreVest is the lender formerly known as Colony American Finance, also recently expanded into wholesale lending for real estate investors.
Beth O'Brien, Chief Executive Officer at CoreVest said of the current deal: "Providing investors with low cost options to finance affordable housing increases the opportunity for families to find places to live in the communities they want to be in."
Here's how it breaks down, according to CoreVest:
In the first transaction, Freddie Mac has guaranteed approximately 80% of the certificates issued by CoreVest in a recently announced $202 million structured transaction, CAFL 2017-2. These certificates will be issued through the FRESR 2017-SR01 offering as part of Freddie Mac's previously announced program focusing on affordable housing in the SFR market. This is the inaugural structured transaction for Freddie Mac in the SFR space and the fifth SFR structured transaction for CoreVest.
In addition, CoreVest received the Freddie Mac National Single Family Rental Seller/Servicer designation and will commence lending under the Freddie Mac SFR pilot in the first quarter.
"Today, Freddie Mac Multifamily has taken another important step to increase the availability of affordable rental housing in communities across the country," said David Leopold, vice president of targeted affordable sales & investments at Freddie Mac Multifamily. "Single-family rentals provide an important alternative for the millions of families looking for options beyond rental apartments who may not have the means to — or choose not to — purchase a home. We are using our multifamily financing capability to help meet this critical need and ensure that as families grow, their homes can grow with them."
Of the 2,355 properties included in this transaction, 94% are affordable to families earning less than 100% of area median income (AMI). In addition, 71% are affordable to low-income families earning less than 80% AMI and more than 12% affordable to families earning 50% of AMI or less. The loans were not underwritten by Freddie Mac at the time of origination but meet the company's current underwriting standards, Freddie Mac said.
CoreVest is the first non-Freddie Mac Seller/Servicer approved as a SFR Seller under this program.
Ryan McBride, CoreVest's Chief Operating Officer said, "We are committed to financing SFR investors across the market. We offer flexible loan products to address almost every SFR financing scenario. These products have helped us become the leading lender to residential real estate investors and close over $3 billion in loans."
