Deal will enable firm to support affordable and workforce housing
Mortgage banking company Merchants Capital (MCC) has secured $262 million for 15 workforce multifamily housing loans through a Freddie Mac-sponsored Q-Series transaction.
The $262 million deal consisted of exclusively workforce properties owned and operated by some of MCC’s clients. On a weighted average basis, 99.5% of units in the portfolio are under 80% area median income (AMI), 70.5% of units under 60% AMI, and 42.3% of units under 50% AMI.
Merchants Bank of Indiana, a division of MCC, will retain the equity and interest-only securities from the transaction, and MCC will continue to sub-service the loans in the pool.
“Our strong expertise in mortgage banking uniquely positions us among other regional banks in the country,” said Evan Gibson, vice president of debt strategies at Merchants Capital. “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.”
The transaction is the 15th deal completed under Freddie’s Q program, which provides increased liquidity to financial institutions supporting affordable and workforce housing. The program also offers a flexible securitization structure and allows institutions to remove seasoned loans from their balance sheets, manage their portfolio and maintain key relationships.
“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 Merchants Capital president and CEO Michael Dury. “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.”
“The Q-Deal structure allows Freddie Mac to meet its duty to serve the 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.