Multifamily Structured Credit Risk Notes (SCR Notes, pronounced “Score Notes”) are unsecured and unguaranteed Freddie Mac corporate debt. They are subject to the credit risk of an identified pool of multifamily mortgage loans for which Freddie Mac provides credit enhancement for the related multifamily bonds issued by state and local housing finance agencies (SCR Notes Reference Pool).
Freddie Mac is a market leader in shifting credit risk away from taxpayers and to the private investor market. SCR Notes help bring this expertise to the affordable housing market. With SCR Notes, a portion of the credit risk is transferred from mortgages in the Reference Pool to credit investors who invest in the Notes, thereby reducing taxpayers’ exposure to mortgage default risk.
Freddie Mac makes monthly payments of principal and interest on the Notes. The principal payments are determined by the delinquency and principal payment experience on the SCR Note Reference Pool.