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Multifamily Viewpoints

Our First Small Balance Loan (SBL) Funding

By Nashwa Moussa*
Published on December 31, 2014

Freddie Mac Multifamily met another key milestone on December 18 as we announced the closings of the first two transactions originated by Greystone under our new Small Balance Loan (SBL) offering.  Funding two loans that total $4.6 million may not sound big, but the refinancing of smaller rental properties in Los Angeles, California is big news.  It confirms Freddie Mac’s commitment to our Small Balance Loan offering.

You can read our joint press release with Greystone here.

Greystone is one of six approved SBL Seller/Servicers, who week-over-week are continuing to submit these loans, which are specifically designed to meet the long-term debt capital needs of small rental property borrowers nationwide,  increase liquidity to owners and operators of smaller properties and provide stability in this somewhat underserved market.  We also have several new Seller/Servicers in various stages of approval and hope to bring them on as official SBL partners in the coming weeks.

More lenders dedicated to our SBL offering will mean more capital to this market segment.  Our current set of lenders has many loans under application that will kick-off the New Year with dozens of loan purchases by Freddie Mac and a steady flow of business.   Not only are we adding more lenders, but we are expanding our staff and improving our internal processes to ensure we offer the most efficient and seamless customer experience possible for all parties involved.

Both our production and underwriting teams continue to grow to meet the expanding pipeline of deals. We are hiring in our headquarters and in our regions to support our lenders and facilitate their lending activities.

We offer hybrid ARM or fixed-rate mortgage loans for these smaller properties ranging between $1 million and $5 million. Terms include up to 80% LTV with underwriting constraints that are highly competitive with the banks, allowing for maximum leverage with an interest-only component. Our SBL offering is also non-recourse, available on a nationwide basis and has step-down prepay alternatives. Our five-year hybrid ARM loan appears to be the product of choice with current borrowers due to its structure and pricing.

We are very excited about our first fundings with Greystone and are optimistic about the growth and future of meeting the needs of the small loan market.  We look forward to working with all of our SBL Seller/Servicer partners to fund many more deals in the New Year.

For more details on our SBL offering including loan parameters and Seller/Servicer eligibility, please see our SBL term sheet and Customer News article. For additional questions, please contact David Cardwell, Annie Gong or Steve Malloy.

*Nashwa Moussa left her position at Freddie Mac in April 2015. She was senior director of SBL & Structured Transactions, Production & Sales.

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