Freddie Mac (OTCQB: FMCC) has commenced its 2025 securitization activities with the pricing of its inaugural Seasoned Credit Risk Transfer Trust (SCRT) offering. Announced on March 6, 2025, this transaction, valued at approximately $759 million, marks a continuation of Freddie Mac’s strategic efforts to manage risk within its mortgage-related investments portfolio. The offering, designated as SCRT Series 2025-1, is structured to transfer credit risk on a pool of seasoned re-performing loans (RPLs), encompassing both guaranteed senior and non-guaranteed subordinate securities.
Strategic Risk Management Through Securitization
The Seasoned Credit Risk Transfer (SCRT) program is a cornerstone of Freddie Mac’s approach to reducing its holdings of less liquid assets and mitigating credit and market risks. By securitizing re-performing loans, Freddie Mac effectively sheds risk in a manner deemed economically reasonable, as stated by the corporation. This latest offering reinforces the agency’s commitment to leveraging securitization as a tool for prudent financial management within the housing market.
Details of the SCRT 2025-1 Offering
The SCRT Series 2025-1 comprises approximately $727 million in guaranteed senior certificates, which benefit from Freddie Mac’s guarantee, and $32 million in non-guaranteed mezzanine and subordinate certificates. The transaction is underpinned by a portfolio of 4,678 seasoned RPLs, characterized by a mix of fixed-, step-, and adjustable-rate mortgages. Importantly, the loan pool includes mortgages that have been modified to support borrowers at risk of foreclosure, alongside loans that have remained unmodified, demonstrating a focus on a diverse set of re-performing assets. As of the specified Cut-Off Date, all mortgage loans within this pool are current, indicating their present performing status. The settlement of this securitization is anticipated on March 11, 2025.
Borrower-Centric Servicing and Neighborhood Stability
Post-closing, Select Portfolio Servicing, Inc. will assume servicing responsibilities for the mortgage loans. Servicing will adhere to specific requirements designed to prioritize borrower retention options in the event of default, aligning with broader objectives of promoting neighborhood stability. This focus underscores a dual mandate of financial prudence and social responsibility, ensuring that risk transfer activities are conducted with consideration for homeowners and community welfare.
Advisor Network and Transaction Expertise
The financial structuring and market placement of the SCRT 2025-1 offering involved a consortium of experienced advisors. Citigroup Global Markets Inc. and BofA Securities, Inc. served as co-lead managers and joint bookrunners, orchestrating the primary aspects of the transaction. Supporting them as co-managers were Nomura Securities International, Inc., Oppenheimer & Co. Inc., StoneX Financial Inc., and Zeus Financial, LLC, with the latter recognized as a certified Minority Business Enterprise. This collaboration of financial institutions highlights the market’s established infrastructure for these complex securitization deals and the inclusion of diverse expertise.
Freddie Mac’s Expanding Securitization Footprint
This $759 million SCRT offering is the latest development in Freddie Mac’s extensive history of seasoned loan transactions. To date, Freddie Mac has sold over $10.4 billion in Non-Performing Loans (NPLs) and has securitized approximately $79.6 billion of RPLs. This substantial volume includes over $30.4 billion in fully guaranteed PCs, $36.2 billion in SCRT securities, and $13.0 billion in Seasoned Loans Structured Transaction (SLST) securities. These figures underscore the scale and maturity of Freddie Mac’s seasoned loan programs and their significant role in the agency’s overall financial strategy. Further details regarding Freddie Mac’s seasoned loan offerings are accessible on the company’s official website.