The following Q&A are for informational purposes only and do not constitute disclosure. Freddie Mac assumes no responsibility to update this information.
- How does Freddie Mac announce a new PC? When are the announcements made?
- What are the minimum principal and transfer amounts for PCs?
- Does Freddie Mac have a 1% clean-up call on PCs?
- How do I identify PCs backed by 10-year mortgages?
- How do I identify the index used to calculate the reset rate for an ARM PC?
- Why has the ARM PC coupon rate changed even though it hasn't reached the first adjustment date?
- How do I account for a Neg Am factor in my calculation of monthly principal and interest payments?
- Why would a CUSIP for a security be available on the Freddie Mac Web site and not on Bloomberg?
- How can I find factor information for an Index Amortization PoolSM?
- Can Multilender and Guarantor pools be combined into Giants?
- When during the month can I settle a Giant PC?
- How soon is disclosure available on Giant PCs?
- How do I determine if a pool is eligible collateral for a Giant PC?
- What is a partial settlement for a Giant PC?
- Where can I find Giant collateral information?
- How can I find out what new Freddie Mac REMIC or structured deals have been priced? How can I obtain information on each of the deals?
- When is disclosure available for new issues?
- How do I obtain CUSIP numbers for REMICs or structured deals prior to settlement?
- What is the difference between an issue date and a settlement date for a REMIC?
- Freddie Mac REMIC tranches are denoted by a one or two letter convention. Do they have any particular significance or meaning?
- What are the minimum principal and transfer amounts for REMIC classes currently issued?
- How do I find out when a Callable REMIC or Callable Passthrough Certificate (CPC) has been called?
- How do I calculate accrued interest when a Callable REMIC tranche or Callable Passthrough Certificate (CPC) has been called?
- I purchased a support class REMIC security. Why isn't it paying according to the schedule in the REMIC Offering Circular Supplement?
- Why does the factor on an Interest-only (IO) REMIC bond decline each month even though the bond doesn't pay principal?
- What is an inverse floating rate tranche? How is the coupon calculated?
- Do residual class holders receive payment even though both principal and interest types are non-payment residual (NPR)?
- How do I calculate the payment for an accrual retail bond? Do I receive principal and interest?
- The factor on my retail bond has decreased. Why haven't I received a principal payment?
- When can a request for early redemption be placed for a retail bond? When will I receive payment on a retail bond?
- What is a Gold MAC?
- What type of collateral backs a Gold MAC?
- How do I determine whether or not a certain Freddie Mac Giant backs a strip?
- What types of loans back Multifamily pools?
- When does Freddie Mac update loan and pool information for its Multifamily PCs?
- How do I invest in Freddie Mac's mortgage securities?
- What is the difference between a seller and a servicer?
- How can I obtain paper copies of Freddie Mac's offering documents and other product materials?
- Are all Freddie Mac mortgage-backed securities cleared through the Fed Wire system?
- What tax reporting is provided for Freddie Mac mortgage securities?
- Do Freddie Mac mortgage securities carry AAA ratings by the major rating agencies?
How does Freddie Mac announce a new PC? When are the announcements made?Freddie Mac discloses new PCs two to four business days (depending on the funding cycle) before settlement in the Daily New PC Issues file. The current Daily New PC Issues file is available on www.FreddieMac.com/mbs in the "Other Resources" box or through disclosure data vendors.
Historical Daily New Issues files can be accessed from the PC & Index Amortization PoolSM Reports page.
All pools are shown with an issue date of the 1st of the month regardless of the actual date of settlement within the month.
- Holders must hold and transfer PCs in minimum original principal amounts of $1,000 and additional increments of $1. A holder may not transfer PCs that have a balance of less than $1,000.
- Freddie Mac Gold PC pools are not redeemable and do not have a 1% clean-up or any other type of call feature. Freddie Mac reserves the right for a 1% optional redemption on most Gold PC REMICs, although Freddie Mac has never exercised this feature.
- Freddie Mac has not assigned a prefix for 10-year maturity PCs due to low originator volume. Currently, these pools are found under 15-year maturity prefixes. There are two different ways to identify whether a PC is backed by 10-year mortgages.
- First, verify that the issue date and the maturity date are within 10 years.
- Second, check the Weighted Average Original Loan Term (WAOLT).
- Although a WAOLT of less than 15 years does not mean the pool has a 10-year maturity date, the answer can be derived from WAOLT information. WAOLT is expressed in quartiles, from lowest value to highest value. If the upper limit of the range does not exceed 120, it is a 10-year maturity pool.
- To locate WAOLT information, go to the PC Security Lookup page, type in the pool number or CUSIP in the appropriate box, select "Quartiles" and click on "Submit."
- The index of each ARM PC is available on Freddie Mac's Mortgage Securities Web site from the PC Security Lookup page. To obtain the index, type in the ARM PC CUSIP or pool number and select the "Description" option and then click on "Submit."
A more detailed description of the indices is available in the Offering Circular for Mortgage Participation Certificates available on the Legal Documentation page.
The PC coupon is a weighted average of the individual mortgage note rates and can change prior to the first adjustment date. For example, if loans are paid off prior to the first adjustment date it may impact the overall weighted average of the PC coupon.
- Freddie Mac payment-capped ARM PCs (prefixes 39, 42, 79, 94, 96 and 5A) and structured PCs series E003 are subject to negative amortization. Negative amortization occurs when a fixed monthly payment on a mortgage is less than the interest accruing on the mortgage for that month. The excess, or deferred, interest, which cannot be paid for the month, is added to the negative amortization (Neg Am) factor, which translates any negative amortization of the underlying mortgages into a number that can be used to adjust the payment of principal and interest on the related PC or structured PC.
The following is an example of how to use the Neg Am factor in a principal and interest calculation for a July payment:
- Interest = [(Original PAR) (May Factor) (May Coupon) / 12] minus [(Original PAR) (June Neg Am Factor)]
- Principal = [(Original PAR) (May Factor – June Factor) plus [(Original PAR) (June Neg Am Factor)]
- The security you are searching for is likely a Multiple Maturity CUSIP (Multimaturity) pool. Multimaturity pools are Freddie Mac's second generation of mortgage PCs, issued from 1972 to 1984. These pools were the first “factored” pools issued by Freddie Mac. One way in which Multimaturity pools differ from other non-Gold PCs is that there is more than one CUSIP associated with each pool.
At least two certificates with different CUSIPs were issued for each pool. Generally, the CUSIPs for a pool are in alphabetical sequence. Also, the issue and maturity dates and/or the coupons may vary for each certificate within a Multimaturity pool. Only prefixes 15, 16 and 17 contain Multimaturity pools.
Bloomberg is set up to recognize only one CUSIP per pool. Generally, the CUSIP that Bloomberg uses for the Multimaturity pools is the "lead" CUSIP, which is the first CUSIP associated with the pool. However, even if the CUSIP is not displayed on Bloomberg, the principal factor is the same for all valid CUSIPs in the Multimaturity pool.
Freddie Mac's Web site recognizes all Multimaturity CUSIPs. To access factor information for your pool, select Security Lookup, enter the CUSIP in the appropriate box and click "Submit."
Information on Index Amortization Pools is available on Freddie Mac's Web site on the fifth day of each month. Information is provided in the Monthly Index Amortization Pool Report available on the PC & Index Amortization PoolSM Reports page. The current factor and historical factors for the two prior months are provided.
Can Multilender and Guarantor pools be combined into Giants?Yes. You can combine both types of PCs into Giant PCs
- Giant PC settlements may only occur beginning one business day after the factor release through the last business day of the month with the exception of the second business day prior to REMIC settlement day.
- Disclosure is generally available one business day following Giant PC settlement. MultiLender PCs and MultiLender Giants are disclosed on their respective SIFMA Regulation Dates.
- Certain PC prefixes may be commingled to form a Giant PC if certain PC pooling rules are met. Refer to the Pooling Requirements for Fixed-rate Giant PCs and Pooling Requirements for Adjustable-rate Giant PCs together with the Giant Prefix Eligibility Chart located on the Giant PC page for collateral eligibility.
- Partial settlement is a service designed to give Giant PC group members more flexibility in delivering Giant PCs to accounts that are willing to take delivery in more than one settlement. In the past, Giant PCs had to be formed on one settlement date. Now, for a small fee, they can be settled over multiple dates, provided that the pool is closed and issued in the same month.
- The settlement collateral backing Freddie Mac Giant PCs and GNMA Giant securities is posted in monthly files on Freddie Mac's Web site. The Giant Collateral Reports are available on Freddie Mac's Web site from the Giant PC Reports page on the first business day of the month after settlement.
When looking for collateral for a specific Giant PC, it is important to know the settlement date in order to pull the correct file containing the settlement collateral. The collateral for a specific Giant PC can be retrieved from Freddie Mac's Web site as follows:
- Go to the Giant PC Security Lookup page.
- Enter a CUSIP and select "Description."
- Make a note of the “As of Date” and then select the Giant PC Reports
- Enter the month and year that corresponds to the "As of Date" and select either the "Giant Collateral Report" which details Gold and non-Gold PCs or the "Giant Collateral Report (GNMA)" which details GNMA securities.
How can I find out what new Freddie Mac REMIC or structured deals have been priced? How can I obtain information on each of the deals?Information on recently priced or issued Freddie Mac REMIC and structured deals is available on Freddie Mac's Web site on the REMIC Reports page in the Recently Priced REMICs report.
After pricing and structuring information has been finalized, information for these deals can be accessed from the REMIC Security Lookup page. Type in the REMIC series number, select "Structuring Information" option and click on the "Submit" button.
Timing of disclosure for newly issued REMICs varies depending on the data. For example, OCS and Structuring Reports (e.g. CUSIPs, FastREMICs, PAC Tables, assumed collateral, etc.) are generally available two business days prior to settlement. Settlement collateral should be available no later than the settlement date.
To obtain the Offering Circular Supplement, go to the REMIC Security Lookup page, type in the REMIC CUSIP or series number and select the "Offering Circular Supplement" option and then click on "Submit".
Generally, two to five business days prior to settlement, CUSIP numbers are available on Freddie Mac's Web site and can be accessed from the REMIC Security Lookup page. Type in the REMIC series number, select the "Structuring Information" option and click the "Submit" button.
Freddie Mac REMICs default to an issue date of the first day of the settlement month. Settlement date is the date agreed upon by the parties to a transaction (i.e., a newly issued REMIC) for the delivery of securities and payments of funds. Most Freddie Mac REMICs settle on the last business day of the month.
Letters used for naming REMIC classes do not have any particular meaning except for classes that use double letters (e.g., LL) or three letters including a double letter combination (e.g., DAA), which represent retail classes that may have many different characteristics than other classes. REMIC classes beginning with the letter “R” (e.g., R or RS) represent residuals. REMIC classes with the letter "Z" generally represent accrual classes.
- All Classes other than Retail and Residual Classes are issued, held and transferred in minimum original principal or notional principal amounts as shown below and additional increments of $1. If a Class is more than one type, its minimum is the greater of the applicable minimum amounts.
Type of Class Minimum Original Principal or
Notional Principal Amount
- Jump or Notional (Jump)
- Ascending Rate
- Descending Rate
- Inverse Floating Rate
- Non-sticky Jump
- Shifting Payment Percentage
- Sticky Jump
- Structured Formula
Retail Classes are issued, maintained and transferred in $1,000 Retail Class units. A Residual Class without an original principal amount or notional principal amount is issued in minimum percentage interests of 1%. Other Residual Classes are issued in minimum original principal or notional principal amounts of $1,000 and additional increments of $1.
Generally, at the end of the calendar month, Freddie Mac notifies the holders of the outstanding classes that will be retired on the next payment date. Freddie Mac sends out an announcement to investors to notify them of each call.
On the first business day of the month of redemption, Freddie Mac will reduce the class factor for each outstanding class to zero. Additionally, certain fixed-rate classes receive accrued interest up to, but not including, the payment date when a security is called. As a result, holders will see a higher than normal coupon for the final payment date. The Offering Circular Supplement contains a description of the call process for the deal.
The accrued interest calculation varies from deal to deal. Please consult the Offering Circular Supplement for calculation details.
The Offering Circular Supplement will sometimes specify that when a bond is called the holders of the fixed-rate classes are entitled to accrued interest up to but not including the payment date. When this occurs, the accrued interest due to the holder of record is reflected as a higher coupon on the call date.
Payment schedules are based on prepayment rate assumptions, which do not reflect actual prepayments. Support classes, also referred to as companion classes, are designed to receive principal payments on any payment date only if scheduled payments have been made on the specified class that it supports. Support classes are more likely to be sensitive to mortgage prepayments rates because they support the principal stability of other classes in the REMIC. As a result, it is possible that you may not receive principal payments for extended periods of time and that the principal payments may change significantly from period to period.
- An IO REMIC bond usually pays interest based on a declining notional (theoretical) principal balance. Typically, an IO REMIC is paired with another bond that has an actual principal balance associated with it. The notional balance of the IO declines proportionately with its paired bond's paydown when applicable.
Inverse floating rate tranches have a class coupon that are reset periodically based on an interest rate index such as the London Interbank Offered Rate (LIBOR) and that vary inversely with changes in the interest rate index.
The inverse floater can be leveraged or non-leveraged. The interest rate on leveraged inverse floaters moves up or down more than one basis point with every decrease or increase of one basis point on the index. The interest rate on a non-leveraged floater moves up or down inversely to the index on a one-to-one basis.
Inverse floating rate bonds tend to perform better as interest rates decline. Investors who seek higher yields in a declining interest rate environment tend to be interested in inverse floating rate tranches. Investors may also use inverse floating rate tranches to hedge interest rate risks in portfolios.
NPR bonds do not pay principal or interest during the life of the bond. However, upon surrender, the holder of the residual class will receive the proceeds of the remaining assets of the related pool after all required principal and interest payments on the related mortgage security classes have been made. The remaining assets are not likely to be significant.
Accrual classes add interest accrued to the principal balance. No interest is paid on these classes, rather interest accrues during each interest accrual period at the rate specified in the Offering Circular Supplement. Payments of principal on the class are made on a pro-rata basis in $1,000 increments. The formula to calculate the monthly payment is:
Monthly Payment = Initial Net Compound Amount * Number of Units Owned * Principal Paydown Factor
NOTE: Initial net compound amount can be obtained from principal payments, net compound amounts and pre-tax yield tables as described in the corresponding Offering Circular Supplement.
The class factor for a retail class applies to the class as a whole, not to individual Retail Class Units. The class factor is a seven-digit number which, when multiplied by the original principal amount of a class, equals the remaining principal amount of that class. Investors in a Retail Class receive principal payments in Retail Class Units, each of which is $1,000. Payment of principal on a Retail Class is subject to the priorities, limitations and allocations described in the related Offering Circular Supplement.
After the amount of principal has been determined for a Retail Class on any given payment date, payment is made to those beneficial owners who have requested priority payments. Priority is given to "Deceased Owners" in an amount up to $100,000 and then to "Living Owners" in an amount up to $10,000. Thereafter, those Deceased Owners will receive a second $100,000 and the Living Owners will receive a second $10,000. This sequence of priorities is repeated until all principal requests have been honored.
If the amount of principal available for payments on any Retail Class exceeds the amount needed to honor all principal payment requests, the Depository Trust Company (DTC) will determine which Retail Class Units will be paid, using its established random lot procedures.
Each Depository Participant receiving such payments, and each financial intermediary in the chain to beneficial owners, will remit payments to their customers according to their own procedures, which may or may not be random lot. Investors may ask their brokers or other intermediaries what allocation procedures they use.
The beneficial owner of a retail bond can apply for an early redemption at any time by sending a written request to the Depository Trust Company (DTC) on their automated system. However, payment is made from available funds and is distributed in the following order:
- First, to the estates of each deceased owner up to the amount of $100,000, and if there are additional funds,
- Second, to each living owner requesting an early redemption by random lot procedures up to the amount of $10,000, until the funds for that payment are exhausted.
- If there is not enough principal available on a given payment date to honor all requests, the requests will be honored on following payment dates as principal becomes available.
What is a Gold MAC?Strips created from Freddie Mac Gold PCs are also known as Gold Modifiable and Combinable Securities (MACS or Gold MACS). Gold MACS are stripped Giant certificates with a modifiable and combinable feature that enable investors to exchange a fixed-rate Giant PC for IO, PO, or a variety of synthetic coupon PCs from a single strip offering. Additionally, a floater/inverse floater enhancement allows for floater and inverse floater pairs to be produced in addition to the synthetic coupon PCs.
- Freddie Mac Gold MACS are backed by a single newly-created Gold Giant PC that is backed by single-family fixed-rate Gold PCs.
- A listing of Freddie Mac strips and the corresponding Giants is available on Freddie Mac's Web site. The Freddie Mac Strips and Associated Giants report is available on the Strip Reports page and is updated whenever a new strip is issued.
What types of loans back Multifamily pools?Loans backing Multifamily pools must be for multifamily residential properties containing five or more dwelling units and designed in whole or in part for residential use. They can include both whole loans or participation interests in mortgages and are not guaranteed or insured by the United States or any federal agency or instrumentality. Additionally, the mortgages are secured by first and second liens on multifamily residential properties and may be either fixed-rate mortgages or adjustable rate mortgages and may be fully amortizing mortgages, amortizing balloon mortgages or interest-only balloon mortgages.
- Freddie Mac updates loan and pool information on its Multifamily PCs on the first business day of the month. The information is available on the Multifamily PC Reports page.
How do I invest in Freddie Mac's mortgage securities?Freddie Mac does not issue securities directly to the public. Please contact your broker if you are interested in investing in Freddie Mac mortgage securities.
- A seller is an entity that sells mortgages to Freddie Mac. Freddie Mac discloses the seller's name at pool issuance. A servicer is the entity that services the loans. Freddie Mac provides servicer information and updates the information monthly. Servicing rights can be sold concurrently in the month of issuance or from entity to entity throughout the life of the mortgage.
- Electronic copies of Freddie Mac's offering documents and other product materials are available on Freddie Mac's Web site. However, paper copies of these materials may be obtained by filling out the Request Form for Mortgage Securities Documents and Publications available on Freddie Mac's Web site.
- The majority of Freddie Mac mortgage-backed securities are in the book entry form and cleared through the Fed Wire system. However, some older mortgage-backed securities such as Penny Pools and GMCs can only be held in definitive form. In addition, high coupon REMIC bonds and REMIC Residual bonds must also be in definitive form.
REMIC Retail bonds, GNMA-backed Giant securities and GNMA-backed REMICs are cleared through the Depository Trust and Clearing Corporation (DTCC) instead of the Fed Wire System.
- Owners of PCs in physical form receive a Form 1099-INT from the FHLMC Trust.
PC owners can obtain monthly tax reporting information from Freddie Mac's Web site by going to PC Security Lookup, entering a CUSIP or Series Number, clicking on "Tax Information", selecting a tax year from the drop down box and selecting "Submit." This information is disclosed annually at the end of January for the prior tax year.
Giant class owners can obtain monthly tax reporting information from Freddie Mac's Web site by going to Giant Security Lookup, entering a CUSIP or Series Number, clicking on "Tax Information", selecting a tax year from the drop down box and selecting "Submit." This information is disclosed annually at the end of January for the prior tax year.
Strip class owners can obtain monthly tax reporting information from Freddie Mac's Web site by going to Strip Security Lookup, entering a CUSIP or Series Number, clicking on "Tax Information", selecting a tax year from the drop down box and selecting "Submit." This information is disclosed annually at the end of January for the prior tax year.
Regular REMIC class owners can obtain monthly tax information from Freddie Mac's Web site by going to REMIC Security Lookup, entering a CUSIP or Series Number, clicking on "Tax Information", selecting a tax year from the drop down box and selecting "Submit." This information is disclosed quarterly.
Multifamily PC owners can obtain monthly tax reporting information from Freddie Mac's Web site by going to Multifamily PC Security Lookup, entering a CUSIP or Series Number, clicking on "Tax Information", selecting a tax year from the drop down box and selecting "Submit." This information is disclosed annually at the end of January for the prior tax year.
Freddie Mac REMIC residual class owners are mailed a Schedule Q quarterly from Freddie Mac
Owners of Freddie Mac mortgage-backed securities not identified by products listed above can obtain monthly tax reporting information from Freddie Mac's Web site by going to REMIC Security Lookup, entering a CUSIP or Series Number, clicking on "Tax Information", selecting a tax year from the drop down box and selecting "Submit". This information is disclosed annually at the end of January for the prior tax year.
- Freddie Mac's mortgage securities are not rated. They carry an implied AAA rating because market participants consider Freddie Mac's guarantee of timely payment and selection criteria of mortgages backing the securities as providing top credit quality. The rating agencies do provide ratings for other Freddie Mac products and can be found on the following Freddie Mac Credit Ratings webpage.