FreddieNotes® Securities FAQ
- Are FreddieNotes securities guaranteed by the federal government?
- Are all FreddieNotes securities redeemable by Freddie Mac?
- Does Freddie Mac's right to redeem FreddieNotes securities present any risk to investors?
- Are FreddieNotes securities repayable before maturity under any other circumstances?
- When can the Survivor's Option be exercised on a FreddieNote?
- Who is eligible to exercise the Survivor's Option?
- Where do I mail in the repayment election form?
- When will I receive the proceeds from exercising the Survivor's Option?
- Are FreddieNotes securities subject to either federal or state and local taxes?
No. FreddieNotes securities are obligations of Freddie Mac only. FreddieNotes securities, including any interest on FreddieNotes securities, are not guaranteed by, and are not debts or obligations of, the United States or any agency or instrumentality of the United States other than Freddie Mac.
Yes, if so provided in the applicable Pricing Supplement, Freddie Mac has the right, but not the obligation, to redeem FreddieNotes securities at par, usually beginning one to four years after issuance.
Yes. Freddie Mac may choose to redeem FreddieNotes securities when prevailing interest rates are relatively low. Following redemption, investors may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as the interest rate on the FreddieNotes securities that were redeemed.
Yes. The representative of a deceased beneficial owner has the right, but not the obligation, to exercise the Survivor's Option and require repayment of FreddieNotes securities by Freddie Mac at par. The calendar year limit on such repayments for any one beneficial owner is $200,000.
Freddie Mac reserves the right to limit the total payments made pursuant to the Survivor's Option during any calendar year to all beneficial owners of FreddieNotes securities to the greater of (1) 1% of the outstanding aggregate principal amount of FreddieNotes securities as of December 31 of the previous year or (2) $1 million.
The Survivor's Option can only be exercised upon the death of the beneficial owner, subject to the passage of at least one year from issue date.
The person with authority to act on behalf of the deceased beneficial owner under the laws of the appropriate jurisdiction can exercise the FreddieNote's Survivorship Option (including, without limitation, the personal representative, executor, surviving joint tenant or surviving tenant by the entirety of such owner). For information on the exercise of the Survivorship Option relating to a Freddie Note held in trust, please see the Instructions for Completing Repayment Form and Exercising Repayment Option in the Offering Circular Supplement for FreddieNotes securities, or contact your own financial or estate planning advisor.
Mail an original copy of the completed form to Freddie Mac's Global Agent as follows:
U.S. Bank Trust National Association
Attn: Corporate Trust Department
100 Wall Street, 16th Floor
New York, NY 10005
As stated in the FreddieNotes Offering Circular Supplement, Freddie Mac makes quarterly payments on any FreddieNotes accepted for repayment pursuant to the exercise of the Survivor's Option on the following dates: January 15, April 15, July 15, or October 15.
If the date does not fall on a business day, the payment will be made on the next succeeding business day. Freddie Mac's Global Agent, U.S. Bank, must receive requests for repayment at least 20 calendar days before the next quarterly payment date.
For example, if the acceptance date for FreddieNotes delivered pursuant to the Survivor's Option was June 1, 2005, we would be obligated to repay those FreddieNotes by July 15, 2005. However, if the acceptance date was July 1, 2005, we would be obligated to repay those FreddieNotes by October 15, 2005.
FreddieNotes securities are subject to taxation under both federal and state and local tax laws.