FREDDIE MAC ANNOUNCES FUNDING OF FIRST LIHTC MODERATE REHABILITATION EXECUTION

Execution Combined With Delegated Underwriting Initiative

McLean, VA – Freddie Mac announced today that, working with CharterMac, it has funded its first Low-Income Housing Tax Credit (LIHTC) Moderate Rehabilitation (Mod Rehab) transaction through Freddie Mac's Delegated Underwriting initiative. The financing for Hartwood Place, a 110-unit property in Jacksonville, FL, is in the form of a Freddie Mac tax-exempt bond credit enhancement.

Freddie Mac is credit enhancing tax-exempt bonds issued by the Jacksonville Housing Finance Authority in the amount of $5.8 million. As additional collateral, Freddie Mac required an escrow to be held by the seller. Because of the limited nature of the rehabilitation, it falls under Freddie Mac's scope for Mod Rehab repairs and includes repairs to both the interior and exterior of the property. Freddie Mac expects the work will be completed within the two-year Mod Rehab period.

“Freddie Mac provided tremendous flexibility in the structuring of its credit enhancement, which it carefully crafted around the borrower and project's specific needs,” said Tim Leonhard, CharterMac Mortgage Capital vice president. “Freddie Mac's Mod Rehab execution and its Delegated Underwriting initiative allowed the borrower to achieve maximum efficiency in interest carry on the bonds, as well as maximizing yield on tax-credit equity by structuring the timing of equity payments. Furthermore, Freddie Mac's bond proceeds married with tax equity proceeds were used to finance acquisition and rehab costs.

“The Mod Rehab execution also eliminated the need for a construction lender – a big benefit in terms of reduced time, complexity and transaction cost. Freddie Mac's unique ability to credit enhance a forward-starting swap was also a significant benefit to the borrower, allowing the borrower to take advantage of short-term interest rate savings during rehab, while also providing the tax credit investor with the fixed interest rate protection it required throughout the remainder of the tax credit compliance period. The borrower was very pleased with this great overall execution.”

“We were very excited at the prospect of working with Charter Mac to fund the rehab of Hartwood Place, which will do much toward keeping the 110-units of affordable housing a pleasant place to live,” said W. Kimball Griffith, Freddie Mac's Multifamily director of Affordable Housing. “Freddie Mac's newly developed LIHTC Mod Rehab program funding through Freddie Mac's Delegated Underwriting initiative was just what was needed for this property.”

Hartwood Place -- 20 two-story buildings on more than 14 acres – was built in 1990 and is composed entirely of three-bedroom units. The complex offers a clubhouse, swimming pool, central laundry, computer center, community room, playground and picnic area. Hartwood Place also has perimeter fencing and offers homebuyer counseling to its tenants.

Exterior renovations will include new roofs, exterior door replacement, concrete paving and sealing repairs, pool renovations, tree removal, and landscaping. Interior improvements will include replacing appliances and kitchen and bathroom cabinets, countertops, sinks and faucets, certain floor coverings, mini-blinds and air compressors.

Freddie Mac's LIHTC Mod Rehab execution helps preserve affordability in properties where the tenants are expected to remain in place during rehab. Freddie Mac provides up-front financing to accomplish moderate rehabilitation for properties with low-income housing tax credit equity. This execution is available both as a four percent tax credit tax-exempt bond execution and a nine percent tax credit cash execution.

The Freddie Mac Delegated Underwriting initiative provides qualified correspondent lenders more expedited processing and more flexibility when underwriting mortgages in exchange for sharing a portion of the risk, as they move towards full delegation in the future.

Since the introduction of the Freddie Mac Program Plus network of multifamily loan originators and servicers in 1993, Freddie Mac has provided financing for over 40,000 multifamily properties totaling more than $100 billion.

Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage passthrough securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than four million renters.

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