WAYS TO INVEST WITH CRTCRT Offerings

STACR notes are unsecured and non-guaranteed notes issued by a third-party trust whose principal payments are determined by the delinquency and principal payment performance on the associated STACR reference pool. The pool consists of recently acquired single-family mortgages or seasoned mortgages from a specified period. Freddie Mac transfers credit risk from the mortgages in the reference pool to credit investors who invest in the STACR notes.

The trust makes periodic payments of principal and interest on the notes to investors, and, under certain circumstances, Freddie Mac receives payments from the trust that otherwise would have been made to the noteholders. Freddie Mac pays a credit premium payment to the trust and benefits from the credit risk transfer by receiving payments from the trust for defined credit events on the reference pool. Any payments to Freddie Mac will reduce the note balances. Reductions of the note balances are based on an actual loss calculation.

STACR SPI is a fully collateralized issuance of non-guaranteed certificates. Using participation interests created for recently originated mortgage loans acquired by Freddie Mac through its cash window, Freddie Mac issues participation certificates (PCs) backed by the PC participation interests, and issues SPI securities initially backed by credit participation interests. 

Principal and interest is paid monthly to the PCs and SPI securities based on payments made by or advanced on behalf of the borrowers. The SPI program includes a constructive default mechanism whereupon removal of a participation interest from a PC, the SPI trust receives the related PC participation interest. Thereafter, 100% of the related loan's activity is allocated to the SPI trust, including both principal and interest payments and any losses. The offered SPI securities are REMIC regular interests.

WLS securitizations comprise features of both traditional private label securities and Freddie Mac guaranteed securities. WLS issues guaranteed senior and non-guaranteed subordinated certificates. Note: STACR SPI is the current fully-collateralized cash CRT securitization issued. The last WLS deal was completed in July 2017.