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Freddie Mac Direct Access Retail REMIC Tranches® FAQ

(Freddie Mac DARTs®)

  1. What are Freddie Mac DARTs?
  2. Are Freddie Mac DARTs a new product?
  3. Why is Freddie Mac issuing Freddie Mac DARTs?
  4. What are the initial investment and the minimum investment increments in Freddie Mac DARTs?
  5. How are Freddie Mac DARTs structured?
  6. How can I find out about the available structures?
  7. Are Freddie Mac DARTs suitable for all investors?
  8. Does the federal government guarantee Freddie Mac DARTs?
  9. Are Freddie Mac DARTs subject to either federal or state and local taxes?
  10. Are Freddie Mac DARTs repayable before maturity?
  11. Who is eligible to make the request on behalf of a deceased owner for the payment of principal on Freddie Mac DARTs?
  12. How do I make the request on behalf of a deceased owner for the payment of principal on Freddie Mac DARTs?
  13. When will I receive a requested principal payment? 
  14. How is the order for distributing the proceeds determined and what are the limits on the allowable amount that can be paid out?
  15. Can I withdraw my request for principal payment on my Freddie Mac DARTs?
  16. How can I find out more information on Freddie Mac DARTs?
  17. How can I invest in Freddie Mac DARTs?

  1. What are Freddie Mac DARTs?

    In an effort to broaden the distribution channel for its Retail Class Units (RCUs), Freddie Mac has partnered with the Incapital LLC to distribute our Retail Class Units as Freddie Mac Direct Access Retail REMIC Tranches (Freddie Mac DARTs) through their InterNotes program.

    RCUs are interests in pools of assets that are backed by residential mortgages, tailored for individual investors and issued as Retail Class Units of Multiclass Certificates, which receive their payments from Freddie Mac PCs. Freddie Mac guarantees the monthly payment of interest and the ultimate payment of principal on these certificates. The priority given to the requests for principal payments from deceased owners enables the use of RCUs as a limited estate-planning device.

  2. Are Freddie Mac DARTs a new product?

    No, this is not a new product. Freddie Mac has issued Retail Class Units since the 1990s.

  3. Why is Freddie Mac issuing Freddie Mac DARTs?

    Freddie Mac is issuing Freddie Mac DARTs through Incapital's Internotes program to broaden the distribution of its RCUs. The Internotes is designed to allow the investing public to purchase Freddie Mac DARTs through a network of registered broker-dealers. The InterNotes distribution channel allows Freddie Mac to diversify its investor base and tap new sources of funding.

  4. What are the initial investment and the minimum investment increments in Freddie Mac DARTs?

    The initial investment in Freddie Mac DARTs is $1,000 and subsequent investments are in minimum denominations of $1,000.

  5. How are Freddie Mac DARTs structured?

    Freddie Mac DARTs may be issued with a variety of coupons, maturities, average lives and principal payment priorities.

  6. How can I find out about the available structures?

    Structures with a variety of coupons, maturities, average lives and principal payment priorities are made available each week. You can learn about the structure details from your broker-dealer. It is the intent of the program to offer each structure from Monday to the following Monday, but it will be subject to change depending on market conditions. All structures will settle at the end of each month.

  7. Are Freddie Mac DARTs suitable for all investors?

    No – they may not be suitable for all investors. The Offering Circular for Freddie Mac Multiclass Certificates and Offering Circular Supplements for Freddie Mac DARTs describe the risks and considerations investors should examine before investing in Freddie Mac DARTs. These risks and considerations may vary depending on each investor’s particular circumstances and on various economic and interest-rate scenarios. Investors should consider carefully the suitability for them of a particular issue of Freddie Mac DARTs.

  8. Does the federal government guarantee Freddie Mac DARTs?

    No. Freddie Mac DARTs are obligations of Freddie Mac only. Freddie Mac DARTs are not guaranteed by, and are not obligations of the United States or any agency or instrumentality of the United States other than Freddie Mac.

  9. Are Freddie Mac DARTs subject to either federal or state and local taxes?

    Freddie Mac DARTs are subject to taxation under both federal and state and local tax laws.

  10. Are Freddie Mac DARTs repayable before maturity?

    Yes. You may request that any or all of your Freddie Mac DARTs be paid in full on the earliest possible payment date. You must submit your request to your broker-dealer or other financial intermediary, who must in turn make the request to the Depository Trust Company (DTC) on their automated system.

    Investors who have properly requested early payment are paid first, to the extent of available principal, with the first priority given to deceased owners and a second priority given to living owners. If more principal is available for payment on Freddie Mac DARTs than the amount covered by valid requests for early payment, non-requesting investors receive principal payments in multiples of $1,000 under random lot procedures.

    Once effective, a request will remain effective for all payment dates unless it is withdrawn or terminated.

  11. Who is eligible to make the request on behalf of a deceased owner for the payment of principal on Freddie Mac DARTs?

    The designated beneficiary of an estate is legally empowered to submit the request for the payment of principal on Freddie Mac DARTs on behalf of a deceased owner.

  12. How do I make the request on behalf of a deceased owner for the payment of principal on Freddie Mac DARTs?

    You must submit the request to the broker-dealer or other financial intermediary, who must in turn make the request to the Depository Trust Company (DTC) on their automated system. You must furnish evidence of death and any tax waivers to the broker-dealer or other financial intermediary.

  13. When will I receive a requested principal payment?

    For a request of payment to be effective for any payment date, the request must be received by DTC no later than the last business day of the preceding calendar month. For example, to be eligible to be given priority for a February payment date, the request must be received by DTC no later than the last business day of January. Once effective, the request will remain effective for all payment dates unless it is withdrawn or terminated.

    Investors who have properly requested early payment are paid first, to the extent of available principal, with the first priority given to deceased owners and a second priority given to living owners. If more principal is available for payment on Freddie Mac DARTs than the amount covered by valid requests for early payment, non-requesting investors receive principal payments in multiples of $1,000 under random lot procedures.

  14. How is the order for distributing the proceeds determined and what are the limits on the allowable amount that can be paid out?

    DTC honors requests in the following order of priority:

    • Requests of deceased owners in the order that DTC received the requests, up to  $100,000 for each requesting deceased owner.
    • Requests of living owners in the order determined by random lot procedures (by the Registrar), up to $10,000 for each requesting living owner

    DTC will then honor requests of each deceased owner based on the order described above, up to a second $100,000 and requests of each living owner as described above up to a second $10,000. DTC will repeat this order of priorities until it has honored all principal payment requests. 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.

    If more principal is available for payment on Freddie Mac DARTs than the amount covered by valid requests for early payment, non-requesting investors receive principal payments in multiples of $1,000 under random lot procedures.

  15. Can I withdraw my request for principal payment on my Freddie Mac DARTs?

    Yes. You may withdraw a request for the payment of principal on Freddie Mac DARTs by notifying your broker-dealer or other financial intermediary, who must in turn notify the DTC through their automated system.

  16. How can I find out more information on Freddie Mac DARTs?

    Legal documentation and the retail brochure are available on the Freddie Mac Web site, www.FreddieMac.com/darts. Also, any broker-dealer in the Freddie Mac DARTs Selling Group would be able to provide information on current structures and on the program. Visit www.FreddieMac.com/darts to subscribe in order to receive weekly rates and available structures from Incapital LLC.

  17. How can I invest in Freddie Mac DARTs?

    Freddie Mac DARTs are offered for sale through a network of registered broker-dealers. Contact your broker-dealer to determine if they offer Freddie Mac DARTs.

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