Maximize Your Portfolio Options
October 6, 2015
Selling seasoned loans to Freddie Mac in a negotiated bulk sales transaction can help you address the challenges of rising interest rates and changing market conditions. We buy portfolios with many of the mortgage products that you originate, including loans made to borrowers with low and very low incomes.
Additionally, Freddie Mac can assist you in analyzing your mortgage portfolio to provide the easiest and most profitable solution for your holdings.
When you sell mortgages to Freddie Mac, you have a number of execution options available – some that allow you to swap your loans for mortgage-backed securities and some that give you cash in exchange for your mortgages.
In a Cash Sale, after receiving and committing to your customized Freddie Mac portfolio bid, you can sell loans and receive cash in as little as three days, which allows you to quickly recover the capital for the mortgages you originate and lend the same funds again to other borrowers.
In a Swap and Hold, you can exchange your portfolio loans with Freddie Mac and receive a security backed by your own mortgages. You'll benefit from monthly servicing income and yield on the security.
In a Swap and Sell, you can exchange your portfolio loans with Freddie Mac, receive a security, and sell the security to a dealer for cash to make more loans. Since typically securities are more liquid than whole loans, you can optimize your liquidity and profitability to meet your business objectives.
In addition to competitive pricing, the benefits of a mortgage portfolio sale include:
- Managed risk-based capital requirements. Creating and holding Freddie Mac securities typically requires less capital than holding whole loans.
- Reduced credit risk. Transfer your risk concentrations that may have built up due to a lack of geographic or origination-year diversification.
- Fine-tuned balance sheet. Sell seasoned loans to Freddie Mac to address the challenges of rising interest rates and changing market conditions.
- Increased liquidity. Use the extra capital to support investments in additional earning assets, acquisitions or expanding your branch network.
- Analysis. You'll work with our portfolio analysis service to help you analyze your mortgage holdings and get the information you need to package loans in a way that will give you the best execution and pricing for a resulting cash or securities sale.
- Transaction. To eliminate late surprises, we'll jointly review summary loan characteristics to ensure accuracy of information that affects our costing/valuation.
- Securitization. You'll receive a detailed process plan that identifies key tasks and milestone dates.
- Let your Freddie Mac representative know that you're interested in a securitization or cash transaction for loans held in your portfolio.