Freddie Mac Tax-Exempt Bond Securitization (TEBS)
Brings capital market efficiencies to the affordable housing market
Key Benefits
- Freddie Mac’s Class A Multifamily Variable Rate Certificates are fully guaranteed tax-exempt and taxable securities supported by pools of unenhanced tax-exempt and taxable multifamily housing revenue bonds
- Owners can exchange unenhanced bonds for senior Class A Certificates that are sold to the public, and subordinate Class B Certificates which are retained by the bond owner and pledged to Freddie Mac
- Forward TEBS is available to securitize pools of fixed-rate multifamily housing revenue bonds through the TEBS execution within a specified timeframe and within a pre-agreed fee and subordination structure
How It Works
- Freddie Mac will guarantee the payment of scheduled principal on the bonds and all interest on the tax-exempt and taxable Class A Certificates.
- Payment to the Class B Certificates will be made on a subordinate “if available” basis only. Additionally, if the Class A Certificates bear interest at a seven-day variable rate, they will be “puttable” upon five business days notice, and Freddie Mac will guarantee payment of the purchase price of any such “put” certificates, if the remarketing agent does not remarket those certificates within such time period.
- Freddie Mac can also issue a forward commitment, which offers locked-in pricing and subordination levels (sizing of the subordinate Class B Certificates).
