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Freddie Mac has been talking about an exit strategy for the multifamily mortgages its purchases for a while: rolling out the K-Certificates (http://www.globest.com/news/1418_1418/washington/178869-1.html) could not have come at a better time. You know the drill why: lending is at a standstill unless you are a stellar sponsor and project and so on. There are a lot of reasons for this state, starting with the fact that the capital markets are frozen solid. For sure, Freddie Mac’s new debt plan is going to free up liquidity in the multifamily market – which has fared better than other asset classes thanks to the GSEs. The bigger question is whether these securitizations – which come with a Freddie Mac guarantee – will spur more movement in the capital markets. It’s tempting to think they will; there has been talk of bringing new CMBS issues to market (http://www.globest.com/news/1415_1415/insider/178811-1.html). I’m betting that while the K-Certificates won’t alone pry open the markets, they will at the very least provide a model for what real estate securities should look like in their next incarnation. One of the problems with the CMBS was that originators did not retain any of the risk. Securities with some form of guarantee could be the answer.

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