Reference REMIC® securities offer investors a structured alternative to a traditional 30- or 15-year mortgage-backed security and build on the success of Freddie Mac's guaranteed maturity class (GMC) product. Freddie Mac GMCs are structured mortgage-backed securities with a shortened stated final maturity. Freddie Mac GMCs are backed by either Gold PCs or Hybrid ARMs.
At the core of the Reference REMIC security are attributes that promote liquidity, transparency and calendar-based predictability. Freddie Mac’s Reference Notes® and Reference REMIC calendar includes optional issuance windows for its Reference REMIC securities. Reference REMICs have a $1 billion minimum issue size, with collateral known at the time of pricing. Reference REMIC securities are distributed through a multi-tiered syndicate structure with daily closing prices posted by the lead managers to TradeWeb® and Bloomberg.
Freddie Mac created the Reference REMIC® security in 2005 to demonstrate an ongoing commitment to product innovation. Reference REMIC securities offer investors a structured alternative to a traditional 30- or 15-year mortgage-backed security and build on the success of Freddie Mac’s Guaranteed Maturity Class (GMC) product.
Reference REMIC securities provide many of the key features that have become the hallmark of Freddie Mac’s Reference suite of products. At the core of the Reference REMIC security are attributes that promote liquidity and transparency.
Freddie Mac Guaranteed Maturity Classes (GMCs) are structured mortgage-backed securities with a shortened stated final maturity. Backed by either Gold PCs or hybrid ARMs, Freddie Mac GMCs are generally issued with guaranteed final payment dates ranging from three to 12 years.
The GMC feature is available on a variety of tranche types. At the guaranteed final date, the investor is paid any outstanding principal on the tranche, plus 30 days accrued interest.
More Liquid than Other Structured Securities
Reference REMIC securities provide more liquidity than traditional structured securities. Each Reference REMIC security contains at least one Guaranteed Maturity Class (GMC) with a minimum GMC tranche size of $1 billion. GMC securities will be distributed through an underwriting syndicate selected from Freddie Mac’s REMIC dealer group. The syndication process ensures broad dealer sponsorship and secondary market support.
Reference REMIC securities offer an unmatched array of attractive features
|Freddie Mac Reference REMIC||Prepayment Linked Notes||Syndicated Callables||ABS|
|Daily Closing Prices||Yes||Some||Yes||No|
|Guaranteed Shortened Final Maturity||Yes||Yes||No||No|
|Fully Collateralized by Mortgages/MBS||Yes||No||No||Yes|
|Collateral Disclosed Pre-Pricing||Yes||No||No||No|
|No Upsize (or "Tapping") Post-Pricing||Yes||No||No||Yes|
Transparent Structures and Pricing
Reference REMIC securities are backed by PCs with pre-disclosed characteristics, making performance analysis more straightforward.
More Predictable Securities
Each Reference REMIC is backed by Freddie Mac Gold PCs, the details of which will be disclosed prior to pricing the GMC offering. All Reference REMIC GMC tranches have limited average life extension risk as a result of the GMC feature that states a maximum final maturity date.
Key features of Reference REMIC securities
|Underlying PCs||PCs underlying the offered GMC are disclosed prior to pricing|
|Guaranteed Maturity Class (GMC)||Varying maturities based on market conditions and collateral|
|Structure||Announced during pre-marketing period|
|Par Coupon||Issued with the closest coupon that trades at a discount to par|
|GMC Tranche Size||Minimum of $1 billion*|
|Offering Frequency||Calendar-based monthly optional issuance windows|
|Re-REMIC Eligibility||Offering dependent|
|MACR Eligibility||Offering dependent|
*From time to time, market conditions may warrant a minimum tranche size below $1 billion.
This product overview is not an offer to sell or solicitation of an offer to buy any Freddie Mac securities. Offers for any given security are made only through applicable offering circulars and related supplements, which incorporate Freddie Mac's Information Statement and related supplements.