Freddie Mac today announced it reached a binding commitment to sell via auction 846 seasoned loans

OREANDA-NEWS. Freddie Mac (OTCQB: FMCC) today announced it reached a binding commitment to sell via auction 846 seasoned loans serviced by JP Morgan Chase Bank, N.A. that it currently guarantees and holds in its mortgage-related investments portfolio. The transaction is expected to settle in October 2016. Freddie Mac, through its advisors, began marketing the transaction to potential bidders on June 24, 2016.

The transaction is a pilot structured sale of seasoned loans. The winning bidder will, upon completion of collateral due diligence, purchase and simultaneously securitize the loans. Freddie Mac will guarantee and purchase the senior tranches of the securitization at par. Freddie Mac may retain or sell the guaranteed senior tranches. The first loss subordinate tranche will be initially retained by the loan purchaser. A key requirement of this transaction is that the buyer of the loans, and therefore the subordinate tranche, has to be an investor with substantial experience in managing both "high-risk" mortgage loans as well as in securitizations.

The collateral is comprised of seasoned Option ARMs and loans that were originated as Option ARMs but have since been modified pursuant to a HAMP or proprietary modification. The majority of the loans have payment histories that are less than six months current or are moderately delinquent. The aggregate pool is geographically diverse and has a loan-to-value ratio of approximately 70 percent, based on Broker Price Opinions (BPOs).

The pool, winning bidder and cover bid price (second highest bid), stated in the form of a whole loan bid, are summarized below. The indicative price assumes Freddie Mac purchases the guaranteed senior bonds at par:

Advisors to Freddie Mac on this transaction are Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC and First Financial Network, Inc., a woman-owned business.