Freddie Mac Update with Regions Bank Managing Director Rickey Mirabito
For years, one of the most beloved financing tools for smaller multifamily deals was Freddie Mac's SBL program. It's now gone, replaced by something new, and if you're buying or refinancing a deal under $10 million, the change affects how you should approach the process.
On this episode, Old Capital's James Eng sits down with Rickey Mirabito of Regions Bank to unpack Freddie's new small-loan program, what borrowers are choosing right now, why the agency book is healthier than the headlines suggest, and the one habit that separates borrowers who win from those who miss out.
Here's what they covered.
Meet Rickey Mirabito and Regions
Rickey has been in agency lending for over a decade. His predecessor firm, Sabal Capital, was acquired by Regions Bank at the end of 2021 and folded into its real estate capital markets group. So for about five years now he's been with Regions, offering Fannie Mae, Freddie Mac, and HUD executions.
RIP SBL: what replaced Freddie's favorite small-loan product
The Freddie Mac SBL (Small Balance Loan) program financed deals from $1 million to $7.5 million, was non-recourse, and competed directly with banks for years. At Sabal, Rickey said, "that was the only thing that we did," roughly 30 to 40 SBL loans a year over a five-to-seven-year stretch.
Borrowers loved it for a few reasons: a step-down prepayment penalty, the speed of getting an application out, coupon-based pricing (you were simply told your rate), and a free spread hold during underwriting.
That program is now gone. Freddie has transitioned it into what it calls Freddie Mac Conventional Small, for loans of $2 million to $10 million.
What's different now: spread over Treasury, no free rate hold, earlier credit review
The new program executes almost exactly like a larger $12 million conventional Freddie loan. On the front end, you get a soft quote, discuss options, and then the lender has to "hard quote" it, collecting due diligence, building a credit memo, and going into Freddie for a formal quote before you can apply.
The key mechanical changes:
Pricing is now a spread over Treasury rather than a set coupon.
The base prepayment penalty is defeasance or yield maintenance, not the old SBL step-down.
You can index-lock at application, but there's no free spread or rate hold like SBL offered.
Rickey said pricing is actually a bit better under the new execution. The adjustment for borrowers is behavioral: old SBL clients were used to saying "I want an application today," and now they have to go through that front-end process first.
There's a real benefit hiding in that friction. Under the old SBL, Freddie's credit team wouldn't even touch a deal until about 50 days into underwriting. Now they review it up front, during the hard-quote memo, so you know their concerns early and get far more certainty of execution.
The sweet spot: 5-to-50 and the AMI goal
If you want the best pricing on this program, you need to understand Freddie's affordability goals. The program's focus is what Rickey called "five to 50 AMI goals," meaning 5-to-50-unit properties where roughly 50 to 60% of the units are at 80% of Area Median Income (AMI). Those deals help Freddie hit its annual affordability targets, so they price extremely competitively.
He gave a concrete example. Take two deals with the same affordability profile, say 80% of units at 80% AMI: a $3 million loan on 35 units, and a $5 million loan on 75 units. The smaller, 35-unit deal will actually price better, by about 20 to 25 basis points, purely because it fits Freddie's 5-to-50-unit goal. It's a counterintuitive but valuable insight: smaller can price better here.
One coverage to rule them all: 1.25x
Under the old SBL, minimum debt service coverage varied by market tier. Dallas County, for example, was a 1.20, while tertiary markets were 1.30 or even 1.40. That's gone. Now it's a flat 1.25x minimum coverage across the board.
For Dallas borrowers, moving from 1.20 to 1.25 sounds like a hit, but Rickey noted that because pricing shifted at the same time, you generally end up at a similar spot on loan proceeds.
There are unpublished "markets of concern," think parts of West Texas or Galveston, where Freddie starts at a 1.30. The upside of the new process is transparency: you learn that at application, and Freddie commits to it. As Rickey put it, they won't review everything at a 1.25 and then surprise you with a 1.30 on the back end. "They're going to commit to where they came out on the front end."
The 2026 volume picture
Halfway through the year, both Freddie and Fannie were targeting roughly $88 billion each and sitting around $30 billion, meaning they have a lot of ground to make up. Rickey said Freddie is doing some "big game hunting," leaning into loans of $75 million and up, but he expects them to find ways to get close to target.
Heading into fall, he anticipates a natural slowdown given where Treasuries are, but also potential spread relief, or Freddie getting more aggressive on credit and interest-only to push proceeds and keep deals moving.
What borrowers are choosing: 5-year paper, floaters, and smarter prepay
Rickey shared what he's seeing borrowers actually pick right now:
Five-year paper. A large portion of business is five-year loans. The seven-year spread is great, but the five-year all-in note rate is often better, and borrowers want flexibility rather than locking in long.
Freddie floaters. After not quoting a floating-rate deal in ages, he's seeing demand, in part because the prepayment penalty gets waived if you roll into a Freddie perm loan. Borrowers use it to get to year two or three.
Smarter prepayment structures. Step-downs have gotten too punitive on proceeds. Borrowers are looking at structures like a "5-3," three years of yield maintenance followed by 1% and 1%, which gives flexibility to refinance in year three or four without being stuck in a full yield-maintenance loan.
A foreclosure that still got done
One of the most instructive parts was a case study. A sponsor had a recent foreclosure, normally a "scarlet letter" that scares off lenders. Fannie Mae was adamant: no. But Freddie ultimately did the deal.
Why? The story held up. The foreclosure had been forced by the sponsor's limited partner equity, a single-check equity partner who decided not to put in more money, so the keys went back. The sponsor had negotiated in good faith with the lender, and the situation was genuinely out of their control. Freddie got comfortable once they understood the "why and the what," and closed it at a 1.30 coverage and 70% LTV, even getting the borrower cash out at a time when almost no one was getting cash out.
Rickey's takeaway: agencies will ask a lot of questions, and that's fine. "Can we help them get to a decision and answer the questions in full and clear from the start?" The trouble begins when a sponsor can't give a straight answer, that's when a lender walks.
He contrasted two borrower stories. A sponsor whose problem is an isolated outlier, with a clear, good-faith explanation, is very financeable. A sponsor with five loans where three are underperforming, all visible in the agency data, is a much harder story. Credit ultimately wants to know one thing: did you take care of everything within your control? Fires, foundation issues, and softening markets happen, but how you responded is what matters.
The agency book is healthier than you think
Despite all the doom talk, the agency portfolios are in strong shape. Citing a recent TREP report, Rickey noted delinquency actually dipped about half a percentage point year over year, and overall agency delinquency sits under 1%, around 0.7%.
"99.32% of the agency loans, and this is Fannie and Freddie, are current," he said.
The real pain is concentrated in one place: the small-balance world. Freddie's small-balance program carries roughly a 5% delinquency rate, which likely explains why they overhauled it. Those are the deals getting "kicked around," with note buyers offering below par, and Rickey expects a good number of small-balance foreclosures ahead. He pointed to one going into foreclosure at just 15 to 20% occupancy, the kind of asset where the question shifts from "was this an owner issue?" to "what's wrong with the property itself?"
That distress, though, is also the opportunity. Smaller borrowers often have thinner balance sheets, less experience, and less willingness to keep pouring money in than a conventional operator with 15 or 20 agency loans. As those small-balance assets sell, Rickey said, it becomes the long-awaited reset, a chance for good operators and new buyers to acquire at an attractive basis.
The real message: be prepared
Asked for a final takeaway, Rickey was emphatic: be prepared and be organized.
Nobody controls Treasury rates. But when rates dip and everyone rushes to refinance at once, borrowers who aren't ready get stuck in a log jam. "If you know you're looking to refinance in the next six to eight months, we should be getting your ducks in a row now," he said, so you can react quickly to a favorable Treasury move and index-lock. Providing your property information, an REO schedule, and a personal financial statement costs you nothing. What costs you is being slow to react and missing the dip.
James added an important reframe on rates. Borrowers fixate on a 4.5% ten-year Treasury and assume financing is too expensive. But agency spreads are very low right now, sometimes as tight as 110 to 150 basis points, so the all-in rate is still under 6%. Back in 2017 and 2018, spreads were closer to 250 over, and even with Treasuries in the 3s, the all-in rate was around 5.5%. In other words, today's all-in cost isn't as far off history as the headline number suggests. On a five-year deal at a 4.50% to 4.60% Treasury plus a 110 spread, you're still sub-6%, and deals can still work.
Key Takeaways
SBL is gone. Freddie Mac Conventional Small ($2M-$10M) replaced it, priced as a spread over Treasury with defeasance/yield-maintenance prepay.
Credit reviews earlier now. Freddie touches the deal up front, giving far more certainty of execution and no back-end surprises.
5-to-50 is the sweet spot. Small properties (5-50 units) with strong 80% AMI affordability price 20-25 bps better.
Coverage is a flat 1.25x, with unpublished "markets of concern" starting at 1.30, disclosed at application.
The agency book is healthy. Over 99.3% of Fannie and Freddie loans are current. The distress is concentrated in small-balance loans (~5% delinquency).
Be prepared. Get your documents in order now so you can index-lock on a Treasury dip. Remember the all-in rate, not just the headline Treasury.
The bottom line
Freddie's shift from SBL to Conventional Small means more process up front, but also better pricing and far more certainty. Meanwhile, the agency portfolios remain remarkably healthy, and the real distress in the small-balance space is creating the reset that patient, well-capitalized buyers have been waiting for. Rickey's advice cuts across all of it: control what you can, tell a clear story, and stay organized so you can move the moment the window opens.
Financing or refinancing a multifamily deal and want to compare Freddie, Fannie, and HUD side by side? The Old Capital team can help you find the right execution. Reach out at oldcapitallending.com