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January 21, 2021

November 2020 SBL Prepayment Report

Small multifamily properties — with five to 50 units — represent nearly a third of the multifamily rental market, and much of this housing stock is affordable to low- and very low-income renters. Financing options for this segment have traditionally been more limited than conventional offerings, with fewer lenders and loan flexibility options for borrowers.

In October 2014, we announced the addition of the Small Balance Loan (SBL) line of business to our lending platform. This program targets loans between $1 million and $7.5 million and offers prepay flexibility to borrowers. Since the program’s inception, we’ve securitized nearly $30 billion on over 11,300 of these loans.

The SBL Prepayment Report leverages our own data and focuses on the voluntary prepayment activity of our SB-Deals over the past 12 months (from December 2019 through November 2020). Based on historical performance, we find that prepay speeds increase with loan seasoning and declining prepay penalties. As loans season and a growing population of loans move into periods with lower prepayment penalties, we expect prepayment activity to pick up. Read the report.

Additional resources

  • See our SB-Deal Investor Presentation for background information on the program’s history, mortgage products, the Freddie Mac Optigo® network and FRESB bond structure.
  • In October of 2019, we released a 5-year SBL anniversary report that summarizes our SBL program since inception, such as geographical concentrations, annual fundamental performance and affordability.
  • For additional details around FRESB loan payoffs, please reference our SB-Deal Performance Presentation.
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