Freddie CMBS Special Servicer Rating Shows Strength of Multifamily Unit

Freddie Mac received positive news from Fitch Ratings as the government-sponsored enterprise was deemed to demonstrate high performance in overall servicing ability for commercial mortgage-backed securities.

With an initial commercial mortgage-backed securities special servicer rating of CSS2-, Freddie Mac’s multifamily business unit has the ability to continue working out commercial mortgage loans secured by apartment buildings with five or more units and acquired from its seller or servicers network.

The latest rating, however, does not address the single-family residential aspect of Freddie Mac’s business.

According to the New York-based ratings agency, characteristics of a level two servicer may include effective management of a diverse portfolio, stable financial resources, well documented and complete policies and procedures, a stable employee base and strong systems and reporting capabilities.

Through the end of September, Freddie Mac was the special servicer for approximately 8,800 loans totaling $94.4 billion secured in the GSE’s multifamily portfolio.

As of the same time, the asset management and operations group at Freddie Mac was actively working out in excess of 100 loans and several REO assets totaling nearly $1.5 billion. The group also successfully resolved more than $1 billion of loan defaults in 2011 through modifications, foreclosure and liquidations, and forbearances with an average loss well below a typical Fitch rated CMBS special servicers, the ratings agency said in its report. 

“The rating is a critical part of maintaining credibility in the market. It demonstrates the financial, operational and staff strength as well as our credit capabilities,” said Michael Lipson, senior vice president of multifamily asset management and operations for Freddie Mac. “We have a good track record of working with all types and sizes of loans to service nonperforming loans.”