Freddie Mac’s K-Deals; a Model for Secondary Market Reform?

Posted To: MND NewsWire

A senior Freddie Mac executive suggested today that policymakers consider his company’s model for securitizing multifamily loans as they grapple with shielding the government from credit risk while reforming the secondary market. Senior Vice President David Brickman, writing in Freddie Mac’s Executive Perspectives Blog, said “K-Deals,” is used for almost all apartment loan purchases, the vast majority of which support affordable rental housing. That model could satisfy policymakers’ search for a system where private capital bears the risk of most residential mortgages, with the government serving as a backstop only in the case of a major economic catastrophe. When Freddie Mac purchases loans they are put into diversified pools, and placed into securities comprised of two classes of bonds :…(read more)

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