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Freddie Mac's Adjustable Rate Mortgage (ARM) PC program appeals to investors looking for assets to match short-term liabilities and liabilities with floating rates. Most mortgages backing Freddie Mac ARM PCs are characterized by conventional first liens, with original maturities of 30 years or less. A weighted average of the characteristics of the underlying mortgages are rolled up to the PC level. PC coupons for ARM PCs are updated monthly based on a weighted average of the interest rates on the underlying mortgages.

Freddie Mac offers ARM PCs backed either by fully amortizing mortgages or initial interest mortgages. Initial InterestSM ARMs require monthly payments of accrued interest only on the principal balance of the mortgage for a specified initial period, followed by fully amortizing monthly payments of principal and interest for the remaining term of the mortgage. The initial fixed-rate period of an Initial Interest ARM may or may not be equal in duration to its interest-only period. Please see the PC Offering Circular by selecting the legal documentation link below for risk characteristics that affect ARM yields.

Freddie Mac guarantees the timely payment of interest and the ultimate payment of principal on all ARM PCs. ARM PCs feature a payment delay of 75 days from the time interest begins to accrue on the ARM PC until the time the investor receives a payment.


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