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Freddie Mac offering certificates backed by single-family rentals

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Freddie Mac offering certificates backed by single-family rentals

Freddie Mac is offering a new series of credit risk transfer securities backed mainly by single-family rental properties affordable for low-income and working families.

Freddie Mac expects to issue about $161 million in SR01 certificates, including 59 loans originated primarily by CoreVest American Finance Lender LLC. The certificates are expected to settle on or about Dec. 18.

The SR01 certificates include three senior principal and interest classes and one interest-only class and are backed by corresponding classes issued by the CoreVest American Finance 2017-2 Trust and guaranteed by Freddie Mac. The trust will also issue class B, class M and class R certificates, which will not be guaranteed by Freddie Mac and will not back any class of SR01 certificates.

Of the 2,355 properties included in the transaction, 94% are affordable to families earning less than 100% of area median income, 71% are affordable to low-income families earning less than 80% of area median income and more than 12% are affordable to families earning 50% of area median income or less. Freddie Mac did not underwrite the loans at the time of origination, but the loans meet its current underwriting standards.

Morgan Stanley & Co. LLC and Wells Fargo Securities LLC are co-lead managers and joint book runners. Drexel Hamilton LLC and Merrill Lynch Pierce Fenner & Smith Inc. are co-managers.