K Certificates Product Overview

Multifamily K Certificates
Multifamily K Certificates are regularly-issued, structured
pass-through securities backed by recently-originated
multifamily mortgage loans. K-Deals feature a range of
K Certificates Feature Loans with Various Terms
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K-000 Series backed by multifamily mortgages with
various terms, but mostly 10-year terms.
investor options, which include guaranteed senior and
interest only classes. The related underlying private label
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K-500 Series for loans with five-year terms.
trust includes unguaranteed mezzanine, subordinate and
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K-700 Series for loans with seven-year terms.
interest only bonds.
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K-F00 Series for loans with floating rates.
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K-P00 Series for seasoned loans from the portfolio.
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K-S00 Series backed by multifamily mortgages on
“ K Certificates provide
investors with structured
guaranteed securities that
have both the structured
credit enhancement and the
Freddie Mac guarantee.”
seniors housing properties
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K-ABC Series utilizes letters instead of numbers to
designate single loan or single borrower securitizations, such as K-SCT for the financing of Starrett City,
a very large multifamily property loan in New York.
Benefits Multifamily K Certificates Can Provide
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Strong credit provided by the Freddie Mac
guarantee plus the additional credit support of an
underlying multifamily mortgage pool underwritten
to Freddie Mac’s portfolio standards.
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Diversification through pooled risk of many assets
versus single asset risk.
Freddie Mac works diligently to manage the terms and
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credit quality of the underlying loans and the composition
features of defeasance or yield maintenance.
of the securities. In addition, there are strict prepayment
restrictions on the underlying collateral which reduces the
Call protection associated with the prepayment
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Rated bonds, including guaranteed senior bonds
privately rated at securitization as AAA, without
interest rate sensitivity of the K Certificates.
taking into account the Freddie Mac guarantee;
and non Freddie Mac-issued unguaranteed
mezzanine bonds publicly rated at securitization
and throughout the term.
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Transparency and consistency on collateral and
deal information through the offering documents.
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Liquidity that is supported by repeatable and
reliable issuance.
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Guarantee of timely payment of interest and ultimate
payment of principal on the guaranteed certificates.
Multifamily K Certificates
General Structure
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Freddie Mac securitizes Multifamily loans via the K
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Freddie Mac purchases all the senior, guaranteed
Certificate structure through the following steps:
bonds issued by the third-party trust and securitizes
First, the loans are sold to a third-party depositor
the senior bonds via a Freddie Mac trust.
who deposits the loans into a third-party trust.
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The resulting Freddie Mac guaranteed structured
Then private label securities backed by the loans are
pass-through certificates (“K Certificates”) are then
issued by the third-party trust.
publicly offered by Freddie Mac via placement agents.
The subordinate bonds and mezzanine bonds,
which are not guaranteed by Freddie Mac, are
issued by the third-party trust and are privately
offered to third-party investors.
Loans
deposited into
the third-party
trust by the
depositor
Freddie Mac
acquires
Guaranteed
Bonds and
deposits them
into a Freddie
Mac trust (1)
Freddie Mac
sells
guaranteed
K Certificates
backed by the
Guaranteed
Bonds
Investors
Freddie Mac
sells loans to
a third-party
depositor
Unguaranteed
Mezzanine
Bonds
Investors
Unguaranteed
Subordinate
Bonds
Investors
(1) Guaranteed Bonds may include senior bonds and/or interest only bonds.
For more information, email [email protected]
or visit www.FreddieMac.com/mbs/html/product/kcerts.html
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