Freddie Mac Tax Exempt Bond Securitization
The TEBS product is a structure in which a Sponsor transfers privately placed tax-exempt multifamily housing revenue bonds (and possibly related taxable bonds or loans) to FHLMC in exchange for FHLMC senior Class-A M certificates that are sold to investors and Subordinate Class-B M Certificates that are retained by the Sponsor.
| Tax-Exempt Bond Securitization (TEBS) | |
| Description | The TEBS structure is a proprietary execution offered by Freddie Mac through which a Sponsor transfers privately placed tax-exempt multifamily housing revenue bonds (and possibly related taxable bonds or loans) to Freddie Mac in exchange for Freddie Mac senior Class-A M Certificates that are sold to investors andSubordinate Class-B M Certificates that are retained by the Sponsor Freddie Mac’s Class-A M Certificates are fully guaranteed tax-exempt or taxable securities supported by pools of unenhanced tax-exempt multifamily housing revenue bonds or related taxable bonds or loans. In the event that the senior Class-A M Certificates bear interest at a variable rate, Freddie Mac may also provide a liquidity facility in the form of a guarantee of the purchase price of the senior certificates if tendered for purchase by an investor |
| Benefits |
|
| Minimum Pool Size | Generally $100 million |
| Subordination Level (Size of B Piece) | On average 15% of total pool size, but can vary based on collateral quality and Sponsor needs |
| Eligible Sponsors | Freddie Mac Targeted Affordable Housing Seller/Servicers and other well-capitalized financial institutions on a case-by-case basis |
| Eligible Properties | Multifamily properties |
| Minimum DSCR DSCR Calculator | 1.05 |
| Max LTV (For Each Asset) | 95% |
| Liquidity Facility Options | In the event that the senior Class-A M Certificates bear interest at a variable rate, Freddie Mac may also provide a liquidity facility; several options exist, depending upon Sponsor preference |
| Hedging | If the Class-A M Certificates are variable-rate certificates, the Sponsor must purchase an interest rate hedge from an approved Freddie Mac counterparty |
