Freddie Mac has set up a new vehicle to provide small financial institutions access to additional liquidity for the financing of affordable housing.

The mortgage loan firm said the Private Placement PC Swap execution enables a lender to swap a pool of loans backed by affordable properties for Freddie Mac Multifamily PCs backed by the loans.

The Multifamily PCs, which are guaranteed by Freddie Mac, can then be sold to investors, returning liquidity to the financial institution.

Robert Koontz, senior vice president of Freddie Mac Multifamily Capital Markets, said: These affordable housing lenders generally lack the scale to access capital markets in a cost-effective manner.

“By swapping Freddie Mac PCs through a low-cost execution, we can provide more liquidity for affordable housing. It’s right in line with our mission.”

Freddie Mac said the newly created Private Placement PC Swap has agreed its first deal with San Francisco-based IMPACT Community Capital. The impact investment manager swapped 77 loans, totalling nearly $141m, for Freddie Mac guaranteed Multi PCs.

David Leopold, vice president of targeted affordable sales and investments at Freddie Mac, said: “Freddie Mac’s execution with IMPACT Community Capital is a unique way to provide more efficient access to capital for the affordable housing space.

“This transaction will not only help thousands of residents in the 77 properties financed, but also ensures that IMPACT has the additional funding it needs to make even more mission-driven investments.”

Michael Lohmeier, CIO at IMPACT Community Capital, said: “IMPACT is excited to be one of the first to partner with Freddie Mac on the Private Placement PC Swap execution.

“It allows us greater flexibility to raise funding from new investors in support of our mission to provide positive impact in underserved communities.”