STACR REMIC structures offerings as notes issued by a trust that is treated as a Real Estate Mortgage Investment Conduit (REMIC). The trust pays interest (uncapped LIBOR floater) and principal (less credit and/or modification losses) to noteholders on a monthly basis. Credit and prepayment performance of the reference obligations determines performance of STACR REMIC securities.

Benefits of STACR REMIC:

  • Reduces counterparty risk exposure to Freddie Mac
  • Avoids any disruption of To-Be-Announced (TBA) market
  • Eliminates Commodity Pool Operator (CPO) requirements
  • Qualifies as a REIT-eligible investment
  • Does not subject international investors to U.S. withholding tax and offered as Regulation S

STACR Trust issues notes out of a third-party trust. Freddie Mac pays a credit premium payment to the trust and benefits from the credit risk transfer through a reduction in note balances for defined credit events on the reference pool. The trust makes periodic payments of interest and principal to noteholders. Freddie Mac receives payments from the trust that otherwise would have been made to the noteholders to the extent there are certain defined credit events on the mortgages in the related reference pool.

Benefits of STACR Trust:

  • Reduces counterparty risk exposure to Freddie Mac
  • Avoids any disruption of TBA (To-Be-Announced) market
  • Does not subject international investors to U.S. withholding tax

STACR Debt was the initial STACR offering and may be used for specific offerings in the future. In this structure, Freddie Mac makes payments of interest and principal directly to noteholders. Principal is reduced to the extent that there are losses on the mortgages in the related reference pool.x