Freddie Mac Prices $243 Million Securitization Backed by 1,282 Seasoned Mortgages

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Freddie Mac priced a $243.4 million securitization of seasoned residential mortgages Monday, returning to a market where older loans, including mortgages modified to help struggling borrowers, are repackaged for investors.

The Seasoned Loans Structured Transaction Trust Series 2026-1 contains 1,282 fixed- and adjustable-rate mortgages. Freddie Mac said the deal comprises approximately $213 million in guaranteed senior certificates and $30.4 million in nonguaranteed subordinate certificates. The junior securities were awarded at auction October 22, and settlement is expected October 29.

Those dates matter. The securities have been priced, but Freddie Mac’s announcement does not establish that the transaction has settled. Nor does it disclose a realized loss or return for the buyers.

According to Freddie Mac’s October 26 transaction announcement, the underlying pool includes mortgages previously modified to assist borrowers at risk of foreclosure alongside loans that were never modified. None was more than 150 days delinquent as of the transaction’s cutoff date. That threshold does not mean every loan is current; the announcement does not provide a full breakdown of delinquency buckets or modification histories.

Where the risk sits

The senior certificates carry Freddie Mac’s guarantee. The subordinate certificates do not. That division is central to the transaction’s structure: investors in the nonguaranteed pieces bear exposure that differs from the senior investors’ guaranteed position, subject to the terms of the offering documents.

Freddie Mac uses its seasoned-loan programs to reduce holdings of less-liquid mortgage assets and transfer credit or market risk where the economics permit. It has pursued several methods: outright sales of nonperforming mortgages, reperforming-loan securitizations and structured transactions such as SLST. The agency said it has securitized approximately $81.7 billion of reperforming loans since 2011, including $13.6 billion through SLST.

The new deal is smaller than the October 2025 SLST Series 2025-2 transaction, which involved approximately $343.2 million in securities backed by 1,985 loans. A comparison of two individual offerings is insufficient to establish a broader change in distressed or reperforming mortgage supply: pool selection, loan seasoning and execution schedules can differ considerably.

Three firms will service the loans

Select Portfolio Servicing, Selene Finance and Newrez’s Shellpoint Mortgage Servicing operation are named as the initial servicers. Their work will matter after the securities change hands, particularly where a borrower’s mortgage has been modified and the investor’s economic interest depends on continued payment performance.

Citigroup Global Markets and Wells Fargo Securities acted as co-lead managers and joint bookrunners. Hilltop Securities, Nomura Securities International and R. Seelaus & Co. were co-managers.

The transaction comes on the same day Freddie Mac released its September portfolio statistics, which show the company’s mortgage-related investments portfolio declined by about $3 billion during the month. The monthly report measures a broader portfolio and should not be treated as an accounting reconciliation of this October securitization.

For mortgage servicers and investors, the immediate question is the performance and protections embedded in the actual offering documents. Freddie Mac’s announcement supplies the deal’s broad composition and timetable, but the complete security terms, loan-level collateral characteristics and potential loss allocation require examination of the transaction disclosures. Freddie Mac cautioned that securities are offered only through the applicable offering circulars and supplements.