K-Deals®
K-Deals® feature a range of investor options with stable cash flows and a structured credit enhancement. K-Deals include guaranteed senior and interest only classes. The related underlying private label trust includes unguaranteed mezzanine, subordinate and interest only bonds.
Freddie Mac works diligently to manage the terms and credit quality of the underlying loans and the composition of the securities.
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General Structure
Freddie Mac securitizes Multifamily loans via the K Certificate® structure through the following steps:
- First, the loans are sold to a third-party depositor who deposits the loans into a third-party trust
- Then private label securities backed by the loans are issued by the third-party trust
- 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
- Freddie Mac purchases all the senior, guaranteed bonds issued by the third-party trust and securitizes the senior bonds via a Freddie Mac trust
- The resulting Freddie Mac guaranteed structured pass-through certificates (“K Certificates”) are then publicly offered by Freddie Mac via placement agents
Series
K Certificates feature loans with various terms:
- K-000 Series backed by multifamily mortgages with various terms, but mostly 10-year terms
- K-500 Series for loans with five-year terms
- K-700 Series for loans with seven-year terms
- K-1500 Series for fixed loans with greater than 10 years
- K-C00 Series for loans with non-standard prepay terms
- K-F00 Series for loans with floating rates
- K-G00 Series for Green Advantage® loans
- K-J00 Series for supplemental loans
- K-L00 Series for large loans
- K-LU00 Series for lease up loans
- K-P00 Series for seasoned loans from the portfolio
- K-S00 Series backed by multifamily mortgages on seniors housing properties
- K-SG00 Series for loans selected in accordance with the Sustainability Bonds Framework
- K-X00 Series for seasoned loans
- 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
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Benefits
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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 unless otherwise indicated
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Call protection associated with the prepayment features of defeasance or yield maintenance or static prepayment premiums
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Rated bonds, may include guaranteed senior bonds privately rated at securitization, without 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
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Additional Resources
Multifamily Issuance Calendar- Multifamily Securitization Overview
- K-Deal Performance Presentation
- K-Deal Program Handout
- K-Deal Program Term Sheet
- K-Deal SOFR Bonds
- K-Deal SOFR Bonds Summary Chart
- K-Deal Fixed Rate Structural Enhancements
- K-Deal A-M Class
- Green Bonds Overview Handout
- 2020 Impact Bonds Report
- Seniors Housing Investor Presentation
- K Certificates News Releases
- Changes to Address Eminent Domain
Disclosures
Find the below items on the Lookup Tools page.
- K Certificates Security Lookup
- Historical Factors & Coupons
- Historical Certificate Reports
- Offering Circular Supplements & Exhibits
You will need to enter the K-Deal Series Number, e.g., K006. For Factors & Coupons, you will also need to enter the Class ID, e.g., A1.