What does it mean to underwrite pools of Freddie Mac loans in K-series securitizations?

This is one of the described responsibilities for a job I applied for. It's a real estate analyst role. What would this specific task involve exactly? Anyone have any experience with this? What would it look like in practice?

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Feb 10, 2020

What type of company is it with?

Sounds like a Investor/B-Piece buyer. You'd basically be taking a look at all of the loans in a K-series and reviewing them to make sure the initial underwriting was good enough so your company will invest. This would involve going back and forth with Freddie so they answer your UW questions. You/your company would want to kick certain loans from the pool because of various reasons and Freddie would try to mitigate those reasons/risks. Lots of reviewing loans that have already been made and negotiating with Freddie on loans that shouldn't be in the pool

Feb 10, 2020

Thanks, this is for an acquisitions analyst role for a REIT.

I know a good amount about real estate underwriting but I don't know too much about debt pool underwriting.

Would the REIT I would be working for basically be making debt investments by purchasing K Certificates, which are secured? And not the mezzanine or subordinate bonds, which are separate?

What does the underwriting process actually look like? Do you do it all in excel?

Feb 10, 2020

Yeah the description seems like it will be making the investments in the K-deal and not the mezz or sub because that is not guaranteed by freddie.

As for the underwriting, the REIT will probably have its own metrics it wants all of the loans to hit to feel safe - I'm sure a majority of that will be in excel. But there will also be a lot of reviewing the Freddie and their seller's underwriting to flag any issues or anything they missed, because these loans have already hit their metrics (typically 1.25x/80%). So a lot of reviewing 3rds looking for things like weird environmental/structural issues or something.

Hope that helps - probably be a lot of reviewing previous underwriting and then doing whatever else the REIT wants to see, both on an individual loan and a pool-wide basis.

Feb 10, 2020

FYI by disclosing you're at a REIT that buys Freddie B-pieces, you can only be at 2-3 firms, and if any of the people interviewing you go on WSO, they could prob quickly figure who you are..... small space.

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Feb 12, 2020

I see what you're saying. But is that necessarily a bad thing? All I've really done is try to learn more about a specific listed responsibility for a job I've applied for. And I have nothing to hide on my profile. Basically I just asked a few real estate modeling questions and that's it.

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Feb 10, 2020