SB-Deals®

In SB Certificates^SM, Freddie Mac guarantees senior classes of securities issued by third-party trusts and backed by Multifamily Small Balance Loans (SBLs). SBLs are underwritten by Freddie Mac at the time of origination for sale to Freddie Mac by a specialty network of Lenders or SBL Lenders. Freddie Mac may also purchase for securitization seasoned SBL loan pools in whole loan sales. Unlike K Certificates^® and other Multifamily securities, Freddie Mac generally does not issue structured passthrough securities in SB-Deals^®. The third-party trust issues the senior classes of securities guaranteed by Freddie Mac as well as unguaranteed subordinate securities.

General Structure

SB Certificates are generally structured as follows:

• Freddie Mac purchases and aggregates SBL loans, by a Seller or groups of Sellers, for securitization.
• Freddie Mac sells the SBL loans to a third-party depositor who deposits the loans into a third-party trust.
• The third-party trust issues private-label securities backed by the SBL loans.
• Freddie Mac guarantees the senior securities issued by the third-party trust, which are then publicly offered. In some cases, a third party may act as loan seller and Freddie Mac may issue structured pass-through securities.
• The private-label securities are not expected to be rated.

Benefits

• Strong credit provided by the Freddie Mac guarantee plus the additional credit support of an underlying Multifamily SBL loan pool underwritten to Freddie Mac's portfolio standards.
• 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 private-label securities guaranteed by Freddie Mac.
• Strength of a Freddie Mac credit review based on decades of strong credit management and underwriting experience.