Q-Deals
Multifamily Q Certificates are structured pass-through securities backed by multifamily mortgage loans. Unlike K Certificates, Q Certificates are backed by an underlying trust that holds multifamily mortgage loans that were not underwritten by Freddie Mac at the time they were originated, and the loans may not have been purchased by Freddie Mac prior to securitization.
Like K Certificates, they feature a range of investor options which include fully guaranteed pass-through bonds or guaranteed senior and interest only bonds. The related underlying private label trust include unguaranteed mezzanine, subordinate and interest only bonds.
General Structure
Freddie Mac securitizes multifamily loans via the Q Certificate senior/sub structure through the following steps:
- A lender sells their loans, after approval by Freddie Mac, to a third party depositor who places them into a third-party trust.
- The third-party trust issues private-label securities backed by the loans.
- Freddie Mac purchases and guarantees the senior bonds and certain other classes issued by the third-party trust and re-securitizes the bonds via a Freddie Mac trust by issuing Structured Pass-through Certificates (SPCs).
- 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.
- The resulting Freddie Mac guaranteed SPCs (Q Certificates) are then publicly offered by Freddie Mac via placement agents.
- Senior and mezzanine bonds may not be issued on every deal.
Benefits
- Diversification through pooled risk of many assets versus single asset risk.
- Transparency on collateral and deal information through the offering documents.
- Guarantee of timely payment of interest and ultimate payment of principal on the certificates guaranteed by Freddie Mac.
- Strength of a Freddie Mac credit review based on decades of strong credit management and underwriting experience.
Disclosures
Find the below items on the Lookup Tools page.
- Q Certificates Security Lookup
- Historical Factors & Coupons
- Historical Certificate Reports
- Offering Circular Supplements & Exhibits
You will need to enter the Q-Deal Series Number, e.g., Q006. For Factors & Coupons, you will also need to enter the Class ID, e.g., A1.