INDIANAPOLIS – Mortgage banking company Merchants Capital (MCC), along with Merchants Bank of Indiana (MBI), announces today that it has completed a $262 million securitization of 15 workforce multifamily housing loans through a Freddie Mac-sponsored Q-Series transaction.
The Freddie Mac program provides increased liquidity to allow financial institutions, such as MCC, to continue to support affordable and workforce housing. Started in 2014, this program offers a flexible securitization structure and allows institutions to remove seasoned loans from their balance sheets, manage their portfolio and maintain key relationships.
This transaction with Merchants marks only the 15th deal completed under the Q platform, with Freddie Mac averaging just over two deals per year. MBI will retain the equity and the interest-only securities from the transaction, and MCC will continue to sub-service the loans in the pool.
The $262 million in loans consisted of exclusively workforce properties, owned and operated by some of MCC’s largest clients. On a weighted average basis, the portfolio had 99.5% of units under 80% area median income (AMI), 70.5% of units under 60% AMI and 42.3% of units under 50% AMI.
“Our strong expertise in mortgage banking uniquely positions us among other regional banks in the country,” said Evan Gibson, Merchants Capital Vice President of Debt Strategies. “We use our balance sheet wisely, finding opportunities for liquidity and flexibility when possible. The ability to utilize the Freddie Mac Q platform gave us an added outlet for our growing production.”
“Our strong expertise in mortgage banking uniquely positions us among other regional banks in the country. We use our balance sheet wisely, finding opportunities for liquidity and flexibility when possible.”
The 15 loans came from across the country, but were concentrated around Indiana and the Midwest, where Merchants has a strong presence.
“Evan and the rest of our capital markets team are dedicated to expanding Merchants product offerings beyond the confines of our balance sheet so that we can be more dynamic, ultimately supporting our customers’ needs,” said Michael Dury, Merchants Capital President and CEO. “We are always working on alternative solutions to provide the best financing solutions in affordable and workforce housing, and this Q transaction is the first step in that direction.”
“Evan and the rest of our capital markets team are dedicated to expanding Merchants product offerings beyond the confines of our balance sheet so that we can be more dynamic, ultimately supporting our customers’ needs.”
“The Q-Deal structure allows Freddie Mac to meet its Duty to Serve objective of supporting financial institutions like Merchants in providing liquidity for affordable multifamily housing,” said Steve Johnson, Vice President of Targeted Affordable Housing at Freddie Mac. “Working together with Merchants Capital, we are supporting workforce housing for more than 764 families located mostly in non-coastal states,” added Christina House, a Multifamily Production Manager with Freddie Mac’s Targeted Affordable Housing group who took the lead on the transaction.
ABOUT MERCHANTS CAPITAL
Established in 1990, Merchants Capital is one of the nation’s top lenders for the refinance, acquisition, new construction and substantial rehabilitation of multifamily, affordable, senior and student housing. Whether you are considering Freddie Mac, Fannie Mae, HUD/FHA insured or balance sheet or tax credit equity financing, let our personalized services help you meet your financing objectives. Experience the creativity of a small lender, with all the capabilities of a large institution. To learn more about Merchants Capital, visit www.merchantscapital.com.
This press release contains forward-looking statements which reflect management’s current views with respect to, among other things, future events and financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “might,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “goal,” “target,” “outlook,” “aim,” “would,” “annualized” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about the industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control, such as the potential impacts of the COVID-19 pandemic. Accordingly, management cautions that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated in these forward-looking statements, including the impacts of the COVID-19 pandemic, such as the severity, magnitude, duration and businesses’ and governments’ responses thereto, on the Company’s operations and personnel, and on activity and demand across its businesses, and other factors identified in “Risk Factors” or “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K and other periodic filings with the Securities and Exchange Commission. Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.