JPMorgan re-packages bonds tied to apartment loans into new debt in rare move

JPMorgan Chase & Co. has bundled the riskiest portions of over a dozen Freddie Mac mortgage bonds tied to small balance apartment loans in what appears to be the first time this sort of debt has been securitized not once but twice.

Known as a resecuritization, the deal pools together 18 bonds created by Freddie Mac, each of which is backed by apartment loans of up to $7.5 million, according to offering documents seen by Bloomberg as well as a note from the credit rating firm Morningstar DBRS. 

The roughly $500 million of mortgage bonds included in the deal are tied to Freddie Mac’s Small Balance program, which offers loans of between $1 million and $7.5 million for apartment buildings with five or more residential units, according to an investor presentation. Freddie Mac obtains the…